MyLoanPro

Why are my Credit Scores so low Mr. Lender?

2011-05-16T09:08:00.000-07:00

If you or your clients ever wonder why they get great scores on-line and then receive much lower scores when they apply for a mortgage, here's the anser!!

Lending Tree Loans Open house for Realtors

2011-05-16T08:45:00.000-07:00

Lending Tree Loans has great tools for our realtor partners as well as a unique and very complete Purchase Marketing Concierges serice to assist in marketing and closing purchase contracts. Tuesday, May 17 from 5:30p to 7:30p at our Irvine loacation:

173 Technology Dr, Irvine, 92618.

Key note speaker will be Camren Ffinley, LTL's Chief Economist
roll out of a comprehensive group of marketing tool xreated specifically for our realtor Partners.
Free food and drink!!!!

Please RSVP to Tom Peterson:
949-231-6388
tom.peterson@lendingtree.com

HARP Extended to 2012!!

2011-05-16T08:37:00.000-07:00

New For Spring 2011 : The Complete HARP / Making Home Affordable Eligibility Requirements

The Home Affordable Refinance Program (HARP) has been extended. The program's new expiration date is June 30, 2012.

If you're underwater on your conforming, conventional mortgage, you may be eligible to refinance your home without paying down principal or having to pay mortgage insurance.
More people are eligible than you might otherwise think.

What Is HARP?
Since the Home Affordable Refinance Program's April 2009 inception, I've fielded a lot of questions about how the program works, and exactly whom is eligible.

HARP goes by several names. I use the blanket name HARP because that's what the government calls it. The program is also known as the Making Home Affordable plan, the Obama Refi plan, and Relief Refinance.

What follows is a collection of answers, plus other details of the program, of which you should be aware.

First: Of primary import are these two points:

Only Fannie Mae- and Freddie Mac-backed loans are HARP-eligible

Your current mortgage must have a securitization date prior to June 1, 2009

If you don't meet these two criteria, you are HARP-ineligible. Period.

HARP : Questions and Answers

How do I know if Fannie Mae or Freddie Mac has my mortgage?
Both Fannie Mae and Freddie Mac have posted "lookup" forms on their respective websites. Check Fannie Mae's first because Fannie Mae's market share is larger. If no match is found, then check Freddie Mac.

If my mortgage is held by Fannie Mae or Freddie Mac, does that mean I'm instantly eligible for the Home Affordable Refinance Program?
No. There is a series of criteria. Having your mortgage held by Fannie or Freddie is just a pre-qualifier.

Is "HARP" the same thing as the government's "Making Home Affordable" program?
Yes.
My mortgage is held by Fannie/Freddie. Now what do I do?
Find a recent mortgage statement and write "Fannie Mae" or "Freddie Mac" on it -- whichever group backs your home loan. You'll need this information because the Home Affordable Refinance Program is slightly different which each entity. Next, you'll want contact a loan officer about starting your HARP refi.

What if neither Fannie Mae nor Freddie Mac has a record of my mortgage?
If neither Fannie nor Freddie has record of your mortgage, your loan is held somewhere else and is, therefore, HARP-ineligible. You may still be eligible for a "regular" refinance to lower rates, however. Use this form to get a rate quote or use a competing bid service like
LendingTree Mortgage Loans.

Am I eligible for the Home Affordable Refinance Program if I'm behind on my mortgage?
No. You must be current on your mortgage to refinance via HARP.

Will the Home Affordable Refinance Program help me avoid foreclosure?
No. The Home Affordable Refinance Program is not designed to delay, or stop, foreclosures. It's meant to give homeowners who are current on their mortgages, and who have lost home equity, a chance to refinance at today's low mortgage rates.

What are the minimum requirements to be HARP-eligible?
First, your home loan must be current. You may not be delinquent or behind in your payments. Second, you can't be more than 25% underwater on your home. Officially, this is known as having a 125% loan-to-value. Third, your mortgage must have been originated and sold to Fannie or Freddie prior to June 1, 2009. this varies according to lender; most have overlays that may not go to the full 125% LTV.

How do I know if my mortgage exceeds the 125% loan-to-value?
Take your the balance of your first mortgage and divide it by the value of your home. This is your loan-to-value.

Do I need to refinance with my current lender?
No. With the Home Affordable Refinance Program, you can refinance with any participating HARP lender. Apply here online for a rate quote.

I put down 20% when I bought to avoid paying mortgage insurance. Will I have to pay mortgage insurance now because of my HARP refinance?
No, you won't. If your current home loan doesn't require private mortgage insurance, you won't have to start paying it on your new home loan.

I pay PMI now. Will my PMI payments go up with a new HARP refinance?
No, your private mortgage insurance payments will not increase. However, the "transfer" of your mortgage insurance policy may require extra steps. Remind your lender that you're paying PMI to help the refinance process move more smoothly.

What's the biggest mortgage I can get with a HARP refinance?
HARP refinances are limited to the lesser of 125% of the home's value, or the area's conforming loan limits. In most cities, the conforming loan limit is $417,000. However, there are some cities in which conforming loan limits are as high at $729,750. You can lookup your area's conforming loan limits by clicking here.

Can I do a cash-out refinances with HARP?
No, only rate-and-term refinances are allowable according to the Home Affordable Refinance Program guidelines.

Can I refinance an investment/rental property with HARP?
Yes, you can refinance an investment/rental property with HARP, but only if the home was originally financed as an investment property. You can't HARP-refi a home that was originally a primary residence and is now considered a rental.

Can I refinance a second/vacation home with HARP?
Yes, you can refinance an second/vacation property with HARP, but only if the home was originally financed as an second/vacation property. You can't HARP-refi a home that was originally a primary residence and is now considered a second home.

Can I consolidate mortgages with a Making Home Affordable refinance?
No, you cannot consolidate multiple mortgages with the HARP refinance program. It's for first liens only. All subordinate/junior liens must be resubordinated to the new first mortgage.

Can I "roll up" my closing costs into a Making Home Affordable refinance?
Yes, mortgage balances can be increased to cover closing costs in addition to other monies due at closing such as escrow reserves, accrued daily interest, and a small amount of cash. In no cases may loan sizes exceed 125% of the home's value, nor may they exceed the local conforming loan limits.

I am unemployed and without income. Am I HARP-eligible?
No. Income verification is required in the HARP refinance program.

My original mortgage was a stated income loan. Will my income be verified with a HARP refinance?
Yes, with HARP, applicant income is verified in the same manner as with a traditional refinance -- via a combination of W-2s, paystubs, tax returns and other, underwriter-requested documentation.

What are the HARP program's mortgage rates?
Base mortgage rates for the HARP program are the same as for a "traditional" refinance. Loan-level pricing adjustments may apply.

Is there a minimum credit score to use the HARP program?
No, there is no minimum credit score requirement with the HARP refi program, per se. However, you must qualify for the mortgage based on traditional underwriting standards.

Do I have to refinance my mortgage with my current servicer?
In most cases, no.

What does the term "DU Refi Plus" mean?
"DU Refi Plus" is the brand name Fannie Mae assigned to its particular flavor of the HARP program. "DU" stands for Desktop Underwriter. It's a software program that simulates mortgage underwriting. "Refi Plus" is a gimmicky-sounding term that could have been anything. The name has been trademarked, however. As an aside, Freddie Mac is using the branded name "Relief Refinance".

Can I remove my spouse or a co-signer with a HARP refinance?
Maybe. HARP guidelines specifically prohibit removing a signer from the note, but there are circumstances in which you can remove a co-signer from the mortgage and from the deed so that the former co-signer has no ownership interest in the home. If that's not possible, to remove a spouse (or co-signed) from the mortgage, a traditional refinance is required.

For how long should I lock my mortgage rate via the HARP Program
Lock for 45 days, at minimum. This is because the HARP program, while streamlined for simplicity, still has some grey areas that can lead to delay. It's better to have a rate lock that lasts too long than not long enough.

How do I apply for the HARP program?
Call me at 888-866-1212 x6388 or email me at tom.peterson@lendingtree.com

Do you REALLY want to abandon oil for "green" energy now? Check out Briton's winter of discontent!

2011-03-12T07:28:00.001-08:00

FHA Changes coming in April

2011-03-09T19:39:00.000-08:00

In additions to the UFMI and Monthly MI, FHA loan limits are changing as well. The High Balance limit of $729750 in affect for some high cost areas (Southern California!) with be reduced to $625000.

Refi or Buy NOW!!!! Call me TODAY! 949-690-9020

How High will Rates go?

2011-03-01T19:26:00.000-08:00

Linking Rising Oil Prices To Rising Mortgage Rates

Political unrest across the Middle East is putting oil prices on the move. Brent Crude has spiked 12 percent since Valentine's Day, pushing past $110 per barrel for the first time in 2 years. It's awful news for mortgage rate shoppers.

Higher Oil Prices Lead To Higher Mortgage Rates
When oil prices rise, they tend to take mortgage rates with them. It's a self-reinforcing cycle that repeats, over and again.

First, there's the rise in oil prices. This can happen for any number of reasons:
1. Demand for oil increases because of expanding economies
2. Supply of oil falls because of reduced drilling capacity, or abrupt disruption
3. The U.S. dollar loses value (because oil is bought/paid for using U.S. dollars)

As oil prices rise, the cost of "doing business" rises, too. This is intuitive -- energy costs are an input for manufactured items, and just the cost of keeping the lights on all day goes up. Before long, business profits shrink.

Meanwhile, as that's happening, homeowners experience rising heating and cooling costs, plus higher prices at the gas pump. In addition, food costs rise because it's more expensive to get food from the farm to the supermarkets. Disposable income shrinks.

Then, the cost pressures on business and households converge.
Businesses raise their prices to make up for rising costs; households bemoan rising costs and demand higher wages. Higher wages increase business costs, and the cycle restarts.

This, my friends, is inflation.

The cycle of inflation has started. Actually, it started a long time ago. It started when the economy sank so low that the Federal Reserve built the ultimate inflation petri dish of:
1. A Zero percent Fed Funds Rate
2. Hundreds of billions of dollars in bond market support
3. A unwavering message that the Fed Funds Rate will stay low for "an extended
period".

Today, food costs are rising, gas prices are rising, and the cycle is gaining speed. Mortgage rates are up by about 1 percent since November. They're poised to move higher.

You may have missed the bottom for mortgage rates in your market, but today's rates are still pretty terrific compared to what you'll see come springtime.
It's time to cut your losses and lock your mortgage rate.

Fannie will be costing buyers more!

2011-02-02T20:35:00.000-08:00

Borrowing to buy a home will get more expensive soon, especially if you have a high credit score because you'll be hit with a new fee.

Fannie Mae, which sets the standards for mortgages it buys from lenders, is increasing the adverse market delivery charge on home loans purchased on or after April 1, and for the first time will require borrowers with a credit score of 740 or higher to pay this fee.

Some lenders will likely start adding the increased (and new) charge to mortgages in the coming weeks, said Cameron Findlay, chief economist for LendingTree.com, an online mortgage-shopping service. By February, most lenders will have followed suit.
Fannie Mae created the adverse market delivery charge in 2008, when the housing market started to deteriorate, Findlay said. The charge penalized those with low credit scores and rewarded borrowers with higher credit scores by enabling them to get the best mortgage rates.

In 2009, Fannie Mae increased the fee for most but still exempted those with scores of 740 and higher. Those with scores of 720 to 739 had to pay a 0.25 percent fee only on mortgages that were 75.01 to 80 percent of a home's value.

The latest fee increase, though, will force those with scores of 720 to 739 to pay a 0.5 percent charge on a loan that is 75.01 percent or more of a home's value, which, for example, adds $800 on a $160,000 loan. And those with scores of 740 or higher will pay an extra 0.25 percent.

The charge rises as the credit score falls, to as high as 3.25 percent for borrowers with scores below 620.

Expect to see a greater disparity in mortgage rates as lenders start applying the higher charge, making it even more important to shop around for the best rate.

Where Will Mortgage Rates Go in 2011?

2011-01-04T18:25:00.000-08:00

Last week's Treasury auctions' effects heavily amplified; High volatility still common in fixed-income markets; Traders coming back this week; Strong beliefs that economic growth in 2011 will be significant; What about housing?

The final week of 2011 was quite the roller coaster for mortgage originators and home buyers waiting to lock in their mortgage rate. After a very weak 5-year Treasury note auction on Tuesday, mortgage pricing worsened by almost 1 point, roughly the equivalent of a 0.25% increase in interest rates. Then, on Wednesday, 7-year notes were on the block. Surprisingly, that auction saw the healthiest bidding in many auctions. Mortgage pricing reversed, more than offsetting Tuesday's losses. Activity was minimal on Thursday, in spite of the best weekly unemployment claims report since 2008, while Friday, mortgage pricing improved on minimal activity, as traders closed out positions to close the year.

The key characteristic seen recently in fixed-income markets, such as those for Treasury debt and mortgage-backed securities is volatility. Movement in markets since the November 3rd announcement of "Quantitative Easing II" has been exaggerated, with daily pricing changes often more than twice the previously common change. That is to say, if mortgage originators had become accustomed to mortgage prices changing by 1/4 to 1/2 point on a busy day, since November 3rd, the new reality is that it isn't uncommon for mortgage prices to change by 1/2 to 1 point. That type of change results in very rapid shifts in mortgage rates, and volatility like that makes home buyers nervous.

A significant factor that has contributed to this volatility is low trading volume. Traders are tending to purchase fewer Treasury secruities, which is contributing to the exaggerated swings we have seen in markets. This is not at all uncommon in the holiday season. From the Monday before Thanksgiving through New Year's Day, many bond traders schedule time off from work, as do professionals in many other industries. The result of this is that the remaining traders are more likely to be swayed when markets make a sudden move in one direction or another. Short sellers, betting that mortgage prices will continue to worsen, also contributed to this effect.

On Wall Street, the consensus is that 2011 will be a strong year for the economy. Recent economic data (other than employment and housing data) has borne this out, with most of the regional Federal Reserve Bank business indexes showing positive signs for growth, inflation starting to pull away from zero, and retail sales figures suggesting the just-ended holiday season was the best in 4 or 5 years. The Federal Reserve, on the other hand, isn't so sure, and is continuing its $600 billion asset-purchase program, intended to provide some stimulus to the economy, but, more importantly, to keep inflation positive.

A too-low inflation rate can lead to economic stagnation much like what Japan experienced in the latter part of the 20th century. The bigger concern is that the economy might actually slip into deflation, in which prices of goods and services decline over time. This causes consumers to defer purchases, expecting lower prices, which leads to lower economic growth and still-lower prices. It can be a very difficult economic cycle to break.

If recent data is correct (and we'll have a very good idea on January 28th when the advance reading on 4th quarter GDP is released), we should expect mortgage rates to continue rising gradually, with the 30-year fixed rate mortgage staying between 5%-6%for most of 2011, barring other significant economic shifts. If, however, the Fed is correct, and economic growth has been overestimated, mortgage rates could correct significantly later this month, likely bringing the average 30-year fixed rate back below 4.5%. At present, according to Freddie Mac, the average 30-year fixed rate is 4.86% with an average of 0.8 points.

This week will provide a significant test for mortgage rates, as the most significant data of any month is published: employment market data. November was a conundrum, as only 39,000 jobs were added, in spite of continual declines in weekly unemployment claims. When we get a reading on December, it is hoped the picture becomes much clearer. Here's what to expect later this week:

Monday:

ISM Manufacturing index
Construction spending
Tuesday:

Factory orders
Same-store sales
Fed minutes
Wednesday:

ADP employment - private payrolls
ISM Non-manufacturing
Thursday:

Weekly unemployment claims
Monster employment index
Friday:

EMPLOYMENT SITUATION REPORT
Ben Bernanke speaks
All the key data points this week hit Americans in their pay checks. Are those checks growing? We'll know by Friday. If they are, then predictions of a better-than-expected 2011 may come true.

But what about housing? Housing led the US economy into the Great Recession, as home prices tumbled when many owners were unable to make their payments, whether initially due to predatory lending, poor underwriting, or poor consumer choices, or later as the initial effects of the crisis sparked wave after wave of layoffs. Housing data has been dismal since the expiration of the home buyer tax credit last June. Because so many middle-class Americans held such a large proportion of their wealth in their homes, this has precipitated the largest broadening in the wealth gap in decades.

Consumer confidence will not rebound strongly until consumers are confident of when home prices will stop falling. At present, there are between 9-11 months of housing inventory on the market, and housing experts suggest there are many more months worth of inventory that have yet to be placed on the market. Will 2011 be the year that housing markets hit bottom? Check back here regularly to find out.

Use Your Mortgage to Take a Last-Minute Tax Deduction Boost for 2010

2010-12-21T19:35:00.000-08:00

Want to increase the size of your 2010 tax deductions? Consider making your upcoming January 2011 mortgage payment while the calendar still reads 2010.

Using The Tax Code To Your Advantage
An "early" payment increases your 2010 tax deductions because of how mortgage interest works within federal tax code.

Unlike rent which is paid in advance at the beginning of a month, interest on a mortgage is always due at the end of the month -- after the money's already been borrowed from the bank.

When you study a mortgage statement, you'll notice that it's actually a bill for the interest that built up during the prior 30 days. January 2011's mortgage statement, therefore, is a bill for December 2010's accrued interest.

For a lot of Cincinnati homeowners, that mortgage interest is tax-deductible in the year in which it was paid. So, to boost your 2010 mortgage interest tax deductions, simply pay your January 2011 mortgage statement before the New Year.

Simple, right?

The Caveats Of Timing Your Mortgage Payment
Before you send that January mortgage payment to your servicer early, it's important to remember that you're dealing with federal tax code. There's going to be caveats, exceptions and special cases that impact your eligibility so be sure to review your individual situation with an accountant before moving forward.

The first gotcha of which to be aware is that is not every mortgage is mortgage interest tax deduction-eligible. The IRS does a pretty good job of outlining mortgage eligibility via this flowchart. You can follow along at-home to make sure your loan qualifies.

The second gotcha is the Alternative Minimum Tax (AMT). Because of AMT, some filers will find their "normal" tax deductions pared -- including some related to the mortgage. This may reduces the benefits of making January's mortgage payment in December.

And, lastly, don't get ambitious.

In the eyes of the IRS, you're allowed to make January's mortgage payment in December because the payment is actually due. If you try to pay February in advance as well, you won't have much to gain. This is because paying February before the mortgage interest has accrued is considered to be a "prepayment" and prepaid mortgage interest is rarely tax-deductible.

If you're planning to make your January payment early, don't cut it close. It's a popular vacation time and servicers are short-staffed. Send your payment prior to Christmas, if possible. You want to give your lender ample time to receive and process paperwork.

And, again, talk to your accountant first. The "pay early" plan could be a wasted effort, ultimately, depending on your individual taxpayer profile.

The complete IRS guidance on home mortgage interest tax deductions is available online.

No Correlation: Feds Funds Rate and 30YR Fixed!

2010-12-14T12:53:00.000-08:00

Greetings!

Good morning! Hope everyone had a great weekend and all open houses were terrific. This weeks article clears up a common misconception with the relationship between the Fed Funds Rate and the 30 Year Fixed Mortgage Rates; there is NO correlation! Also, there are some interesting events taking place this week that could possibly have a big impact on the interest rates (read Market Commentary).

Interest rates are still at 40 year lows, but for how much longer is unknown. So be sure to contact us today to see what service is available for you during these extreme lows in the mortgage rates! We are available by phone at (949)690-9020 or via email so we can discuss the opportunities that are available for you today.
--
No Correlation: Fed Funds Rate & 30 Year Fixed Rates
The Importance of Language Adjectives play an important role in the English language -- they modify nouns. Because of adjectives, we can linguistically separate good movies from bad movies, rainy days from sunny days, and sore losers from lovable losers.

Sometimes, adjectives are superfluous. For example, it's pretty clear that this blog is a mortgage blog so when yours truly writes something like "rates are lower", it's implied that I'm talking about mortgage rates.

I don't need to constantly say "mortgage rates".

Other times, however, omitting adjectives leads to misunderstandings. And it happens nearly every time the Federal Open Market Committee meets.

Here's why.

Explaining the FOMC in Layman Terms

The Federal Open Market Committee is a government group that makes monetary policy. It's job is akin to the gas-and-brake pedals on a car -- speed up or slow down the vehicle that is the U.S. economy.

The FOMC has 12 members and is headed by Chairman Ben Bernanke.

8 times annually, the Fed gets together to discuss a host of economic issues and, when the meeting is done, the members vote on whether to raise, lower, or leave unchanged an interest rate called the Fed Funds Rate.

The Fed Funds Rate is the prescribed interest rate at which banks lend money to each other overnight.

Simplified, when the Fed Funds Rate is high, banks end up paying a lot of money in interest payments and are less inclined to borrow from one another, thereby slowing down the economy. When the Fed Funds Rate is low, borrowing is cheap, and the economy is spurred forward.

Because the Fed Funds Rate is directly related to Prime Rate, the basis of business and consumer borrowing, the FOMC's vote carries huge implications for the economy as a whole.

The FOMC Does not Vote on Mortgage Rates

The FOMC meets Tuesday and adjourns at 2:15 PM ET. The group is expected to leave the Fed Funds Rate unchanged within its current range of 0.000-0.250 percent. This is the lowest Fed Funds Rate is history and the Fed has said that the Fed Funds Rate will stay near zero for "an extended period".

However, by 2:30 PM, news stories will surface online about how the Fed voted to "leave rates unchanged" today.

And this brings us back to adjectives -- implied or otherwise.

See, the proper verbiage from the press would be "the Fed voted to leave the Fed Funds Rate unchanged today", but that's not how the headlines will be phrased. They'll just say "rates".

This is a big deal only because most Americans don't know what the Federal Reserve's true scope is; they never learned what the Fed does for the country, or how it does it. It's the main reason why, in my experience, Americans tend to think that the Federal Reserve controls daily mortgage rates.

It doesn't. But... Because of this misconception, when Americans read about the FOMC and "rates", they just assume the story is about mortgage rates.

It's not.

Comparing the Fed Funds Rate to Mortgage Rates

The FOMC doesn't control mortgage rates. If it did, the chart at top would be less staggered.

Going back 10 years to 2010, the relationship between the Fed Funds Rate and the 30-year fixed rate mortgage has been indirect, at best. The spread in rates has been as narrow as 1 percent and as wide as 5 percent. There was even a period in the 1970s and 1980s where the spread went negative; where mortgage rates were lower than the Fed Funds Rate.

And if you need to know the biggest reason why the Fed Funds Rate is untied from mortgage rates, it's because the Fed Funds Rate is an overnight rate and the 30-year fixed rate is a long-term rate.

Borrowing money is much different over 8 hours as compared to 263,000 hours.

Make a Mortgage Rate Lock Plan Ahead of the FOMC

It's imprudent to float a mortgage rate ahead of an FOMC meeting. Despite the near-universal belief that the Fed Funds Rate won't be changed, there's always the chance that the Fed says something "good" for the economy, causing mortgage rates to spike.

It's happened in the past and it could happen again.

If you're shopping for a mortgage or otherwise not locked in, talk to your loan officer in advance of the Fed's 2:15 P.M. ET announcement Tuesday. Rates may not rise, but then again, maybe they will. It stinks to be on the wrong side of that bet.

U.S. Mortgage Delinquency Rate Could Fall to 5% in '11

2010-12-08T13:58:00.000-08:00

The percentage of U.S. consumers who are delinquent on their mortgages could fall to about 5% by the end of 2011, from an expected 6.2% at the end of this year, according to a leading credit bureau.

Even so, the proportion of consumers who are 60 or more days overdue on their mortgages would still be sharply higher than the historical range of 1.5% to 2%, according to TransUnion LLC, which analyzed about 27 million randomly selected consumer records from its database. The Chicago credit bureau first started tracking these statistics in 1992.

In data released Tuesday, TransUnion forecasts that mortgage delinquencies will fall to 4.98% in the fourth quarter of 2011 from 6.21% at the end of this year. According to TransUnion, this delinquency rate peaked at 6.89% in fourth quarter of 2009, as lenders tightened underwriting standards.

A decrease in mortgage delinquencies, traditionally a precursor to foreclosure, could boost the faltering recovery in the U.S. economy and the residential real-estate market.

"We think that the mortgage industry isn't out of the woods yet, but it's starting to move in a better direction," said Steve Chaouki, a group vice president in TransUnion's financial-services unit.

Protracted and high unemployment and depressed home values are contributing to the elevated delinquency rate.

TransUnion also forecast that credit-card delinquencies, an important gauge of future losses for lenders, will continue to fall, though not nearly as sharply. By the end of this year, the ratio of credit-card borrowers who are 90 days or more delinquent on one or more of their credit cards is expected to reach 0.75%-below the levels at the beginning of 2007, at the peak of the credit boom, according to TransUnion.

As credit quality improves, this delinquency rate is expected to fall to 0.67% by the end of 2011. Credit-card delinquencies are lower than mortgage delinquencies in part because credit-card lenders have more ways to control the potential losses, such as reducing customers' credit lines.

Freddie Mac Announces New Price Hits for Certain Loans!

2010-12-01T07:14:00.000-08:00

Freddie Mac announced changes to its delivery fees for loans pooled starting Mar 1, 2011. No word yet from Fannie, but the GSEs have a long history of following each other in these matters. One of the biggest change is that for all LTV's greater than 70%, The price hit goes from .25% or 25 basis points in cost to 50. It doubles.

To the average consumer, that means that the rate that they had hoped for will be at least .125% higher than the standard similar rate for a loan with less than a 70% LTV.
Additionally, there are substantial hits for people who want to subordinate their current 2nd mortgage. Finally Freddie announced a 75 basis points hit for all Condos. Remember...Fannie will usually follow. For more information, click on:

http://www.freddiemac.com/singlefamily/pricing_center.html

VOTE Today for Real Change!

2010-11-02T05:02:00.001-07:00

encourage you to vote today; vote for a change, a real change in the direction from the one our government has chosen to take us over the past two years! Vote for more freedom, smaller government, reduced spending and a return to the ideals of the founders of this great country! It’s not too late! We cannot be lukewarm today friends, we have a two party system and unless a third can gather significant strength the reality is that voting for a third party or write-in is more than a wasted vote, it’s a vote for the opposition!

YES on Prop 23

NO on Prop 25

Let’s go forward and fight the good fight!

YES ON PROP. 23

2010-10-27T10:38:00.000-07:00

VOTE YES for PROP. 23! AB32 will cost us 1.5 million real jobs and promises to create 1 million mythical green jobs…they just are not there! It will lead to $9/gal gasoline and tax you an average of $4500/yr for using the “freeways” in rush hour! This proposition just delays the implementation this catastrophy until the unemployment rate is below 5.5%. IT JUST MAKES SENSE!!! In addition AB32 will do NOTHING to decrease the dreaded green house gases as we would be the ONLY state in the country, the ONLY government entity in the WORLD to implement such EXTREME regulations. If ever fully implemented it will ONLY trash our economy and do NOTHING to improve our environment!

VOTE for real Change!

2010-10-26T16:09:00.001-07:00

Vote with your mind not your emotions! Where are we, you and me personally as well as our country? Our national debt has more than doubled and is now totaly unsustainable, government is even more intrusive in our personal lives, we've been lied to AGAIN and still there is no transparency, accoubtability or integrity in congress or the whitehouse! We have two choices only, to keep going down this road or to turn it around. It is really that simple. If you want to change this direction, Vote Republican down the line. If you are happy with the way congress and our president have led us the past two years, vote anything other than Republican. We don't have a perfect alternative but we do have a better one!

2010-06-02T09:43:00.001-07:00

I can't believe I'm sitting in the social security office! This is for old people!

2010-05-30T10:17:00.001-07:00

At the beach! What a gorgeous day...and it's free!! Wahoo!

6 Rules of good Nutrician!

2010-03-03T14:28:00.001-08:00

6. Never Skip Breakfast
Yes, mornings are crazy. But they’re also our best hope at regaining our nutritional sanity. A 2005 study synthesized the results of 47 other studies that examined the impact of starting the day with a healthy breakfast. Here’s what they found:

People who skip breakfast are more likely to take up smoking or drinking, less likely to exercise, and more likely to follow fad diets or express concerns about body weight. Common reasons cited for skipping were lack of time, lack of hunger, or dieting.

5. Snack With Purpose
There’s a big difference between mindless munching and strategic snacking. Snacking with purpose means reinforcing good habits, keeping your metabolic rate high, and filling the gaps between meals with the nutrients your child’s body craves.

4. Beware of Portion Distortion
Snack portions aren’t the only things that have increased wildly in size. Since 1977, hamburgers have increased by 97 calories, French fries by 68 calories, and Mexican foods by 133 calories, according to analysis of the Nationwide Food Consumption Survey.

3. Drink Responsibly
Too many of us keep in mind the adage "watch what you eat," and we forget another serious threat to our health: We don’t watch what we drink. In fact, according to research from the University of North Carolina, Americans now slurp up nearly 25 percent of their calories in liquid form; nearly double the rate we used to drink just 20 years ago. One study found that sweetened beverages constituted more than half (51 percent) of all beverages consumed by fourth- through sixth-grade students. The students who consumed the most sweetened beverages took in approximately 330 extra calories per day, and on average they ate less than half the amount of real fruit than did their peers who drank unsweetened or lightly sweetened beverages.

Another important strategy: Be extra careful about the juice you purchase. Too many "juices" are little more than sugar water masquerading as the real thing. If you can, it's best you make your own fruit and vegetable juices to be sure.

2. Eat More Whole Food and Fewer Science Experiments
Here’s a rule of healthy eating that will serve you well when picking out foods for your family: The shorter the ingredients list, the healthier the food. (One of the worst foods we’ve ever found, the Baskin-Robbins Heath Shake, has 73 ingredients; and, by the way, a whopping 2,310 calories and more than 3 days’ worth of saturated fat! What happened to the idea that a milk shake was, um, milk and ice cream? The FDA maintains a list of more than 3,000 ingredients that are considered safe to eat, but we’ve found reasons for concern for a number of the additives on that long list, and any one of them could wind up in your next box of mac ’n’ cheese.

1. Set the Table
Children in families with more structured mealtimes exhibit healthier eating habits. Among middle- and high-school girls, those whose families ate together only once or twice per week were more than twice as likely to exhibit weight control issues, compared with those who ate together three or four times per week.

Of course, the notion of a 6 p.m. dinnertime and then everyone into their pj’s is a quaint one, but it’s hardly realistic in a society where our kids have such highly scheduled social lives that the delineation between parent and chauffeur is sometimes difficult to parse. While we can’t always bring the family together like Ozzie Nelson’s (or, heck, even like Ozzy Osbourne’s), we can make some positive steps in that direction. One busy family I know keeps Sunday night dinner sacred, no social plans, no school projects, no extra work brought home from the office. Even keeping the family ritual just once a week gives parents the opportunity to point out what is and isn’t healthy at the dinner table.

2010-01-03T11:20:00.001-08:00

Need a landscaper? This guy is awesome!! http://ping.fm/Y0hFT

2010-01-02T14:31:00.001-08:00

Obama Exec. Order alters your Constitutional Protection! http://ping.fm/xGBF4

Obama Exec. Order Alters your Constitutional Protection

2010-01-02T14:27:00.000-08:00

With the signing of an under-publicized amendment to Executive Order 12425, Barack Obama has fundamentally altered your constitutional rights. His actions are undermining your rights to protect personal privacy from a foreign internationalist police agency named Interpol. A one-paragraph executive order may seem inconsequential to many, but this action has far reaching implications and threatens the sovereignty of America.

Obama's secretive Executive Order amended an order issued by President Reagan in 1983. Reagan's order recognized Interpol as an International Organization and gave it privileges and immunities commonly extended to foreign diplomats. Reagan opened the door to allow Interpol to operate in partnership with the U.S. but with significant constitutional safeguards. Specifically, Interpol's property and assets remained subject to search and seizure by American law enforcement, and its archived records remained subject to public scrutiny under provisions of the Freedom of Information Act. Interpol had to answer to the FBI and U.S. courts under Reagan's order. These safeguards were stripped away by Obama's action the week before Christmas without debate or explanation. Obama picked the holiday season to make this radical change to minimize media coverage.

This order marks a significant change in federal policy and usurps the constitutional power of our government by yielding it to an international organization. Michael van Der Galien writes, "This foreign law enforcement organization can operate free of an important safeguard against government and abuse. Property and assets, including the organization's records, cannot now be searched or seized. Their physical operational locations are now immune from U.S. legal and investigative authorities."

Obama has given an international organization unsupervised freedom to investigate Americans on our own soil without recourse or the supervision of our own government.

Andy McCarthy writing for the National Review asks some very significant questions: "Why would we elevate an international police force above American law? Why would we immunize an international police force from the limitations that constrain the FBI and other American law-enforcement agencies? Why is it suddenly necessary to have, within the Justice Department, a repository for stashing government files which, therefore, will be beyond the ability of Congress, American law-enforcement, the media, and the American people to scrutinize?"

Interpol is the enforcement arm of the International Criminal Court (ICC). The United States never signed onto the Rome Treaty which created the ICC because of the potential for abuse by foreign interests. Obama has signaled he may sign the treaty over these objections and subject Americans to prosecution overseas in the ICC. This is harmful for two reasons. First, the U.S. Constitution clearly states that it is the supreme law of our land and allowing the ICC to supersede the U.S. Constitution violates America's sovereignty. Second, the War on Terror is unpopular with Europeans and the ICC may attempt to prosecute heroic American soldiers with trumped up war crimes. Obama is putting brave American men and women at grave risk.

An added wrinkle to this executive order is that Interpol's operations center for the United States is housed within our own Justice Department. Many of the agents are Americans who work under the aegis of Interpol. This order has potentially created the new civilian security force that Obama proposed during his campaign. This group of law enforcement officials is no longer subject to the restraints enshrined in the U.S. Constitution.

The order guarantees that Interpol officers have immunity from prosecution for crimes they may commit in the United States. Ironically, some Interpol nations are attempting to try American intelligence agents for their work abroad in the War on Terror.

This order shows blatant disregard for the U.S. Constitution. While Obama is extending due process rights to terrorists he is weakening those same rights for American citizens. If a citizen were to be prosecuted by Interpol their newly granted immunity would interfere with the discovery process. Since Interpol files are immune to disclosure, a citizen could be denied his right to see the information used to prosecute him or her.

Obama's executive order has done more to weaken civil liberties than the much maligned Patriot Act. The silence in the mainstream media on this issue should scare all freedom loving Americans. Obama just signed away parts of our precious legal protections.

2010-01-01T10:57:00.001-08:00

Check this out!! Especially the article about Interpol! This is scary stuff! http://ping.fm/nz9df

2009-12-31T19:14:00.003-08:00

Hoping yours will be a happy, prosporous and very blessed new year! Make Proverbs 3:5 you resolution!

2009-12-31T19:14:00.001-08:00

Hoping yours will be a happy, prosporous and very blessed new year! Make Proverbs 3:5 you resolution!

2009-12-26T09:53:00.001-08:00

If we are in Christ, we have been completely forgiven, we have eternal life, God works all things for our good, God is for us, He supplies all of our needs AND NOTHING can ever separate us from His Love (Romans 8:38-39)! Are you in Christ?

2009-12-25T09:42:00.001-08:00

Merry Christmas Jesus! He has given us the best present of all, life eternal! Not only the future, but He says in Romans 8:32 that "
Since God did not spare even His own Son but gave Him up for us all, won't God, who gave us Christ, also give us everything else?" Know Joy this Christmas, Know Christ!

2009-12-24T13:50:00.001-08:00

What would make you feel Joyous this season? How about Romans 8:31 "What can we say about such wonderful things as these? If God is for us, who can be against us?" The God of the universe is FOR YOU!!!

2009-12-23T08:48:00.001-08:00

It even gets better - Romans 8:28 "We know that ALL things work together for the GOOD of those who love Him..." Know His JOY because He loves you personally and makes ALL you are experiencing work for good in your life!

2009-12-22T08:44:00.001-08:00

Realize the Joy of Christmas. Romans 8:11 tells use He has given us eternal life! Now that's worth feeling joyful about! No Jesus, No Joy...Know Jesus, Know Joy!

2009-12-20T13:40:00.001-08:00

We have so very much to be thankful for this season. Let us not forget our service men and women in harms way.
http://ping.fm/cFqVi

Joy is your choice!

2009-12-20T11:15:00.001-08:00

Joy can be your this Christmas and all year round! Romans 8:1 says "There is no condemnation for those who belong to Christ Jesus"! In the greek, "no" mean NO, none, nada, zip! No matter what you've done, there is NO condemnation IF you belong to Christ. Well, do you? No christ, No Joy...Know Christ, Know Joy! Now that is something to be JOYFULL about!

2009-12-11T08:24:00.001-08:00

SLIM FOR LIFE: Better than a new years resolution! Start now and be 20 lbs lighter BEFORE the new year! www.getslimforlife.org

How much will you pay for healthcare? Plenty!!

2009-12-09T08:33:00.001-08:00

Just how much can the average American family expect to pay for health insurance if the proposals currently making their way through Congress become law? It's a difficult question to answer, in part because how much you'll pay will depend on many variables.

President Obama promised that "you’ll save money" as a result of this bill. That's going to be a hard promise to keep. Most estimates suggest that the proposed legislation is much more likely to push costs up, not down, for most Americans.
Take the recent analysis from the Congressional Budget Office (CBO). Cheerleaders for the legislation (in this example, The New York Times) claimed that the CBO found “there would be no major increase in premiums for the overwhelming majority of Americans who already have insurance.” Yet the actual report is less reassuring. The CBO estimated that by 2016, the average premium for those in the individual market (around one in six of those insured) could expect an average premium 10 to 13 percent higher than under current law. For those with family coverage, that could mean an extra $2,100 per year. People in the small and large group markets were projected to experience essentially no change in their premium costs. That's relatively comforting, but doesn't exactly meet the President's threshold of “saving” you money.

The CBO also explains that this data is for the “average” person. Actually, price changes would vary based on personal circumstances: as the report states, “other provisions would tend to increase the premiums paid by healthier enrollees relative to those paid by less healthy enrollees or would tend to increase premiums paid by younger enrollees relative to those paid by older enrollees.” Indeed, those who are younger and healthier can expect big increases in how much they pay. One analysis estimated that premiums for the younger generation could increase “by as much as 40% more than the average rate change.”

Some analysts suggest that CBO may be unduly optimistic, arguing that CBO may be under-estimating the number of young people who will opt to have no insurance (in spite of the individual mandate), preferring to pay the penalty rather than overpriced premiums. Other researchers estimate that individuals could end up paying thousands of dollars more in premiums.

The analysis is pretty technical, and the exact numbers depend on many different assumptions. But common sense should answer the question—how much will you be paying?—for most Americans: more!

The scope of government interference in the insurance market is about to expand dramatically. Bureaucrats will dictate what insurance packages must contain, which is akin to someone accompanying you while grocery shopping, saying “sorry, you have to get—and pay for—all these vegetables you don't really want.” Insurance companies will be prohibited from taking relevant factors (like age, health condition, and gender) fully into account when pricing policies. That means that some (particularly older consumers and those with pre-existing conditions) will pay less for insurance, but it also means most people are going to pay more in the form of higher premiums.

As if acknowledging that costs will rise, the government will offer subsidies to some families (based on income) to lessen the blow of higher premiums. Yet premiums are only one way that families will pay more for this health care bill. The legislation is expected to cost about a trillion dollars over ten years. The media echoes the claim that the legislation is “paid for” and won't add to the debt. Let's be clear about what that means: the government will “pay for” this new entitlement by slashing about $400 billion from Medicare and raising taxes to cover the rest. In other words, the costs of the bill will be paid for by seniors, who will receive fewer services, and by the rest of us through higher taxes.

The higher taxes may not hit every family directly, but they’ll still end up footing much of the bill. The Senate plans to tax health insurers, medical device manufactures, and drug companies—and much of the cost of those taxes will be passed down to consumers. High income earners will be hit with an additional tax, which will affect many small business owners and therefore their employees and customers. Other employers will face penalties for not offering sufficient health insurance. That will raise the cost of employment, which is bad news for the legions of unemployed and those who fear joining their ranks.

Analysts will quibble about exactly how much this legislation will cost. That's an important process. But let's not lose sight of the big picture: this is a mammoth piece of legislation that will cost the American people a huge amount of money – and liberty.

4 Giant Holes in the Global Warming Theory

2009-12-08T08:11:00.000-08:00

Repeating the words "scientific consensus" over and over and telling sad stories about polar bears does not qualify as "science." So, why is it that the people who insist that Man-made global warming is based on science, not politics, always get shaky and defensive when people want to actually talk about the reasoning behind it?

When was the last time you heard a scientist get hysterical when you asked him to explain Einstein's theory of relativity? If you ask a scientist why nothing can move faster than the speed of light, he doesn't tell you a terrible story about how koala bears will die if you don't believe the theory is right, does he? Scientists who are confident and in command of the facts don't need to distort data and duck basic questions about the assumptions that are behind scientific theories.

So, why is it that the people who insist that man-made global warming is occurring right now can't come up with coherent answers to many of the most basic problems with the ideas that undergird their theory?

Climate change has been around as long as the earth: If you listen to global warming alarmists, you'd think the climate had been a flat line until mankind started industrializing, after which the temperature rocketed straight upwards. However, the reality is far different, as even the New York Times has been willing to admit:

In October, Dr. (Don) Easterbrook made similar points at the geological society meeting in Philadelphia. He hotly disputed Mr. Gore's claim that "our civilization has never experienced any environmental shift remotely similar to this" threatened change.

Nonsense, Dr. Easterbrook told the crowded session. He flashed a slide that showed temperature trends for the past 15,000 years. It highlighted 10 large swings, including the medieval warm period. These shifts, he said, were up to "20 times greater than the warming in the past century."

So, the planet has had bigger temperature shifts than the one we're experiencing now. It has also been warmer than it is today:

The...warming before our last ice age was much warmer than anything we've had since. We had a warming that peaked 9000 years ago, another warming that peaked 5000 years ago. Both were warmer than today. Probably the Roman warming and the medieval warming were both warmer than today -- and we've had 8 warmings of the earth since the last Ice Age.

So how can we, given our limited knowledge of how the climate works, attribute the extremely limited amount of warming we experienced over the last century to mankind? The honest answer is: We can't.

The earth was cooling from roughly 1940-1976: Despite the fact that widespread industrialization was occurring during that 30 year time period, temperatures dropped so much that there were claims we were going into a dangerous period of "global cooling." If global temperatures are tightly bound to man-made greenhouse gasses and those gasses were being rapidly introduced to the atmosphere, then the earth should have been warming, not cooling during that period. The obvious conclusion is that global temperatures are not nearly as closely associated with man-made greenhouse gasses as some people would have us believe.

So, if it's global warming, why isn't there any warming occurring now? One of the many revelations from Climategate is that behind-the-scenes, scientists who buy into man-made global warming are admitting what skeptics have been saying publicly for years now: The globe has been cooling since 1998. Again, if global warming has its bootlaces hitched to the amount of man-made greenhouse gasses that are being produced and those numbers are increasing, why hasn't the temperature gone up as well? There's a simple answer: Man-made greenhouse gasses are not a decisive factor in raising or lowering the temperature of the earth.

Climate models can't accurately project the weather 100 years in the future: The truth is that we don't fully understand how our planet's climate works and thus, our climate models don't work very well. Since the climate models can't explain the climate over the last 25 years and they can't explain the leveling off of temperature since 1998, why would anyone believe they can predict conditions in 100 years? As computer programmers say, "garbage in, garbage out."

The Doomsday predictions from global warming alarmists are absolutely meaningless because they're based on climate models that don't work very well in the first place. As Dennis Avery, co-author of Unstoppable Global Warming: Every 1500 Years has said:

I think they pull their predictions out of their hats and I don't think they have any validity whatsoever.

What the global warming alarmists are asking of people is no small thing. They want us to spend trillions of dollars, dramatically impact our economies, and change the way people across the world live for the worse. Those are not trivial changes and simply having scientists -- who've been put under enormous political pressure and make a living off global warming grants – say, "Trust us, it's real," isn't going to cut it for proof. If global warming alarmists can't even deliver plausible answers to the most obvious problems with their theory, then no one should take them seriously.

Are you a Tenther?

2009-12-05T11:38:00.001-08:00

Are you a tenther? I hope so!! Our founding fathers were. What they were inspired to create needs to be maintained at all costs! http://ping.fm/wsZtX

2009-12-02T08:47:00.001-08:00

Let your light shine and help the world remember whose birthday we are celebrating and why!! Less PC and more JC in this season.

2009-12-01T11:50:00.001-08:00

SLIM FOR LIFE: Why do men lose weight faster than women? http://ping.fm/Xmvay
www.getslimforlife.org

2009-11-23T11:49:00.001-08:00

Take control of your Health. Lose 20 lbs by Christmas! www.getslimforlife.org

2009-11-22T11:02:00.001-08:00

Incredibly funny yet poignant message from Doug Fields. Check it out!! http://ping.fm/6qJPV

2009-11-18T15:35:00.001-08:00

FREE Live Webinar in one hour! Lose 20-30 lbs by Christmas! Register now! http://ping.fm/KYwEe

2009-11-17T07:41:00.001-08:00

Lose 20-30 lbs by Christmas and keep it off in the New Year. No resolutions needed! Webinar Wed at 5pm pst, be there!! Register now: http://ping.fm/AhHdn

2009-11-15T13:13:00.001-08:00

Give yourself the gift of health!! Lose 20-30 lbs by Christmas! www.getslimforlife.org

2009-11-13T12:22:00.001-08:00

Lose 20-30 lbs by Christmas!! www.getslimforlife.org

2009-11-12T13:32:00.001-08:00

Modify Your Own Mortgage click here: www.modifymyownloan.com

2009-11-12T12:36:00.001-08:00

Join the exploding Health and Wellness business arena. Register for this FREE webinat today at 5pm!
http://ping.fm/Dmsu9

2009-11-04T11:46:00.001-08:00

Be Slim Challenge!! Emotional Eating - anyone out there guilty? Me too!! Here is an oppotunity to talk with Dr. Melissa McCreery, author of "Emotional Eating Toolbox" http://ping.fm/jtrXX
on a conference call Thursday at 5:30pm pst. Call (321) 354-6946 ID# 603175#.

2009-10-27T09:31:00.001-07:00

Whoho!! I'm down 30 lbs as of today! That's like loosing 2 std bowling balls of weight! How would you feel if you could do that or more? Feel better, look better, be better!! www.slimforlife.org

2009-10-17T09:30:00.001-07:00

I'm fine but now my car is sick! In the waiting room at the auto dr!

2009-10-17T07:39:00.001-07:00

Kevin Glass : Living in Fear - Townhall.com ( http://ping.fm/7Y4Gl )

2009-10-17T07:31:00.001-07:00

Sandy Rios : Obama is Sure About Something - Townhall.com ( http://ping.fm/CMOuj )

2009-10-15T13:14:00.001-07:00

You've got to see this amazing dog!! http://ping.fm/VKFnP

2009-10-14T12:58:00.001-07:00

Movie Premier you need to see!! Check this out! http://ping.fm/UIHhI

2009-10-10T13:43:00.001-07:00

Only 4 calls left for you to discover an amazing opportunity! Dia 712-432-0075 PIM# 238523 at 2:30, 4:30, 6:30 or 8:30 today!!! Then contact me!!!

2009-10-09T15:51:00.001-07:00

Call 712 432 0085 @ 430pm pin# 238523# DO IT!

2009-10-09T14:12:00.001-07:00

Need Mo Money? Mationwide conference call at 2:30!! 712-432-0075 PIN# 238523#. Then contact me!! 949-690-9020

2009-10-09T09:08:00.001-07:00

Oops! Just so there's no misunderstanding on what I did well, that was Slept well not spet well!!

2009-10-09T09:04:00.001-07:00

Nyquil is my new best friend! Still feel like crap but spet well. May have to go to Celebrate Recovery after I kick this cold!!

2009-10-08T14:04:00.001-07:00

Nationwide live conference call in 25 minutes...opportunity is knocking!
712-432-0075 PIN# 238523#

2009-10-08T09:10:00.001-07:00

I hate being sick!!! Sore throat, sniffles, any cures out there?

2009-10-07T20:11:00.001-07:00

Conference call in 15 minutes...be there!! 712-432-0075 PIN# 238523#

2009-10-07T18:57:00.001-07:00

Opportunity is knocking! Conference call tonight at 8:30pm nationwide: 712-432-0075 PIN# 238523. Contact me to move forward!!!

2009-10-06T15:48:00.001-07:00

Taking a starbucks break! Looks like it'll be a long day!

2009-10-04T19:12:00.001-07:00

Great Day! Well into a book by Coach Joe Gibbs call Game Plan for Life...awesome - check it out!
http://ping.fm/xjSyu

Fact checking Obama's Healthcare Speech

2009-09-24T07:28:00.000-07:00

“If you misrepresent what's in this plan, we will call you out,” President Obama warned in his health care address to Congress earlier this month.

Fair enough. But the President himself has made numerous claims during this debate that don’t meet the straight-face test.

When the President says that health care reform will not require anyone to drop their current coverage, he fails to account for an independent analysis by the Lewin Group showing that as many as 114 million Americans could lose their current coverage and instead end up on a government-run plan under House Democrats’ proposal (H.R. 3200.) Even the most conservative estimates say millions could be shifted to a government-run plan.

When the President pledges that reform will not add to the deficit, not even a little, he neglects to mention that House Democrats’ plan would increase the deficit by $239 billion over 10 years, according to the non-partisan Congressional Budget Office.

What’s worse, when the President insists that middle-class families won’t see a tax increase – as he did repeatedly during his recent appearance on ABC’s This Week – it’s as if he failed to read the health care bills altogether. On page 167 of H.R. 3200, the title of section 401 reads: “TAX ON INDIVIDUALS WITHOUT ACCEPTABLE HEALTH CARE COVERAGE.” The Associated Press didn’t mince words when it began a fact check piece, “Memo to President Obama: it’s a tax.”

If the President read these bills, he’d also find that his pledge to protect seniors’ Medicare benefits rings hollow. According to the nonpartisan Kaiser Family Foundation, House Democrats’ plan cuts Medicare Advantage programs by more than $172 billion.

As a result, six million seniors will be denied access to an affordable Medicare Advantage (MA) plan, including three million who will lose the plan they currently have, according to an analysis completed by Republicans on the House Ways & Means Committee. And that’s just the beginning. The House Democrats’ bill includes a total of more than $500 billion in Medicare cuts, meaning reduced benefits and fewer choices for seniors.

To be fair, there are areas in which the President has sought to make up for the shortcomings of Democrats’ costly government takeover of health care. It was encouraging when the President’s pledge to Congress that “no federal dollars will be used to fund abortions” was followed by a meeting at the White House with pro-life activists. It turns out, however, that the Administration would not commit to inserting a provision that explicitly excludes abortion from health care reform.

Thus, the status quo remains: House Democrats’ health care legislation would allow the U.S. Secretary of Health & Human Services to include abortion as a benefit in the government-run health care option.

It was also encouraging when the President assured law-abiding taxpayers that illegal immigrants should not and will not be covered under the Democrats’ health care plan. The non-partisan Congressional Research Service has confirmed, however, that there is no mechanism included in the House bill to verify that individuals are U.S. citizens or legal immigrants before they receive government benefits.

House Republicans offered two amendments in the committee process to correct this: the first would have prevented illegal immigrants from being automatically enrolled into Medicaid and the second would have required better screening for applicants for federally-subsidized health care to ensure they are actually citizens or legal immigrants. Both were rejected by Democrats.

These are just a couple of the many ideas House Republicans have offered to improve Americans’ health care. For instance, why not allow small employers to group together through national associations so they can buy health insurance for their employees like big companies and unions can today? Why not allow the American people to buy health care plans across state lines? Why not get serious about ending junk lawsuits and more importantly the costly defensive medicine that doctors are forced to practice?

We outlined these proposals in a letter to the President back in May and asked to sit down with him and discuss them. The response we received essentially said ‘Thanks, but no thanks.’

For his part, the President has talked about a “whole series of Republican ideas” being included in health care reform. This is just another myth perpetuated by the President, whose rhetoric simply doesn’t match the reality of congressional Democrats’ government-run health care proposals.

This isn’t about calling out President Obama for the sake of doing so. The American people deserve to know the unvarnished truth about the potential consequences of this costly government takeover of their health care. The President’s failure to meet this common-sense standard is yet another indication it’s time to hit the reset button and start over in a bipartisan way to achieve health care reforms hard-working Americans can support and afford.

Tragic Result of a Bank's Total Disregard for One of it's Borrowers

2009-08-27T13:30:00.001-07:00

This is an email I just received from a fellow advocate announcing a tragic event that should shake us all. hopefully it will shake the banks as well.

We at Z Law Center experienced our first actual loan modification casualty. The stress for my client was too great and he committed suicide. This was an honest man that not only burned through all of his savings, but started using his parents savings to try to keep up with his payments. We plead with his mortgage lenders for help since March 20th to help him and it has fell of deaf ears.

He got injured on his job and had a back surgery that required 18 months of rehab. His employer laid him off and disability only lasted 12 months. He had many complications that kept him from supporting himself. Because he was current on his mortgage, we could not get any help from either GMAC or San Diego County Credit Union. What we got was hundreds of re-faxing documents because they did not receive them or we need updated pay stubs to proceed, when he clearly gets a disability check that does not change. To date we still cannot get anywhere with either of them and have fully complied with every single request (road block/stall tactic) they threw at us. I spoke with his mother yesterday and she told me that apparently the lenders are going to get what they wanted, his home. Home is valued at $250,000 and he owes $350,000.

Our wish would be that some good can come of this senseless loss of life.

My Sincere Regards,

Scott M. Bradley
Consumer Protection Advocate

If Gov't Won't Help, Who Will?

2009-08-27T08:30:00.000-07:00

Assisting the needy in health care is a "moral imperative" -- not a constitutional right. The two are as different as a squirt gun and an Uzi.

If something is not permitted under our Constitution, the federal government simply cannot do it. Period. The Founding Fathers vigorously debated the role of the federal government and defined it in Article I, Section 8 -- spelling out the specific duties and obligations of the federal government. Most notably, this included providing a military for national security, coining money, establishing rules for immigration and citizenship, establishing rules for bankruptcy, setting up a postal system, establishing trademark and copyright rules, and setting up a legal system to resolves disputes, in addition to a handful of other matters.

Charity is not there.

Congress began ignoring its lack of authority for charity before the ink dried on the Constitution. When Congress appropriated $15,000 to assist French refugees in 1792, James Madison -- a Founding Father and principal author of the Constitution -- wrote, "I cannot undertake to lay my finger on that article of the Constitution, which granted a right to Congress of expending, on objects of benevolence, the money of their constituents."

But what about the Constitution's general welfare clause?

Madison said: "With respect to the words general welfare, I have always regarded them as qualified by the detail of powers (enumerated in the Constitution) connected with them. To take them in a literal and unlimited sense would be a metamorphosis of the Constitution into a character which there is a host of proofs was not contemplated by its creators."

And consider government welfare's effect on people's willingness to give. During the Great Depression -- before the social programs that today we accept as givens (Social Security, Medicare, Medicaid) -- charitable giving increased dramatically. After FDR began signing social programs into law, charitable giving continued, but not at the same rate. People felt that they had given at the office and/or that government was "handling it."

Government "charity" is simply less efficient than private charity. Every dollar extracted from taxpayers, sent to Washington, and then routed to the beneficiary "loses" about 70 cents in transfer costs -- salaries, rent and other expenses. The Salvation Army, by contrast, spends 2 cents in operating costs, with the remainder going to fundraising and the beneficiary. They achieve this, among other ways, by relying on volunteers to do much of the work.

Following Hurricane Katrina, private companies, including The Home Depot and Walmart, provided basic needs, such as water and shelter, faster than did government. What were their motives? Generosity? Positive public relations -- a form of "selfishness"? Does it matter?

What about the issue of "moral hazard"? Does government welfare distort behavior and cause people to act irresponsibly? In 1964, President Lyndon Johnson launched a "War on Poverty." "Anti-poverty" workers literally went door to door to inform women of their "right" to money and services -- provided the recipients were unmarried and had no men living in their houses. Out-of-wedlock births skyrocketed. In 1960, before the "War on Poverty," out-of-wedlock births accounted for 2 percent of white births and 22 percent of black births. By 1994 -- just three decades after Johnson began his "War" -- the rates had soared to 25 and 70 percent, respectively.

Numerous studies conclude that children of "broken homes" with absentee or nonexistent fathers are more likely to commit crimes, drop out of school, do drugs and produce out-of-wedlock children. In 1985, the Los Angeles Times asked both the poor and non-poor the following question: Do you think those on welfare have children to get on welfare? More poor people (64 percent) said "yes" to that proposition than did non-poor (44 percent).

If not taxation, how then?

In 1871, the city of Chicago burned to the ground. Contributions, with virtually no money from government, rebuilt the city. After 9/11, so many Americans gave money that the Red Cross used some contributions for non-9/11 purposes. Christianity Today wrote in January 2002: "Suddenly awash in a sea of money, relief agencies such as the Salvation Army need help. So much money -- $1.5 billion so far -- has come in that charities are having a hard time spending it." And Americans donated an even greater sum to those affected by hurricanes Katrina and Rita.

Three in four families donate to charity, averaging more than 3 percent of their income, with two-thirds going to secular charities. In total, Americans give more than $300 billion a year -- more than the gross domestic product of Finland or Ireland. More than half of families also donate their time.

Absent (unconstitutional) government programs, individuals and charitable organizations can, will and -- in many cases -- already do provide services to the needy. A limited government -- one that taxes only to fulfill its permissible duties -- would allow even more disposable time and money.

People-to-people charity is more efficient, less costly, more humane and compassionate, and more likely to inspire change and self-sufficiency in the beneficiary. People can and would readily satisfy society's "moral imperative."

Obama Healthcare Exampes Slaps Doctors

2009-08-23T08:01:00.000-07:00

President Barack Obama has taken to a unique and possibly quite macabre strategy into the August recess. In speech after speech on the need for the federalizing control of a national health care system President Obama has taken to insulting the wrong people--physicians--but beyond that he has turned them into orated illustrations of terror. I believe in doing so he is demonstrating an unusual degree of deception to which he is willing to stoop, all for the cause of saying he did "something" about health care.

Roughly one month ago President Obama stated in a press conference from the White House, "So if you come in, and you've got a bad sore throat, or your child has a bad sore throat, or has repeated sore throats. The doctor may look at the reimbursement system, and say to himself, 'You know what, I make a heck of a lot more money if I take this kid's tonsils out.' Now that may be the right thing to do but I'd rather have that doctor making those decisions, just based on whether you really need your kids tonsils out, or whether it make just make more sense just to huh... change... huh... maybe they have allergies, maybe they have something else that would make a difference."

In one swipe he slanders thousands of the very best children's doctors and ears, nose, and throat specialists across the board. He does so with an assumption that those who practice medicine are driven by greed, and not the welfare of their patients. Yet let me ask you this, how many children's doctors do you know, or have you had for your family? In many cases across America one doctor has been the family pediatrician for two to three generations of children, and extended family, and friends of that family. In all honesty do you think such a reality would exist, if they were treating kids like clunkers that can be cashed in for parts?

Roughly two weeks ago President Obama at a townhall meeting said,

"Let's take the example of something like diabetes, one of uh... A disease that's sky-rocketing, partly because of huh... obesity. Partly because it is not treated... huh... as effectively... as it could be. Right now if we paid a family... If a family care physician, works with his or her patient, to help them lose weight, modify diet, monitors whether they are taking their medication in a timely fashion. They might get reimbursed a pittance. But if that same diabetic ends up getting their foot amputated, that's $30,000, $40,000, $50,000, immediately the surgeon is reimbursed."

There he was again with the profit motive. Only this time he was actually making the argument that the doctor would be so malevolent as to allow the diabetic in question to purposefully worsen the condition, just to cash in. I cannot repeat this strongly enough--his willingness to view doctors with such contempt and disrespect sickens me, as it should every medical practitioner in the nation. As best as I can tell there is no other industry that swears to the ideals of such a lofty vision as is found in the Hippocratic Oath. Yet in allegiance to such an oath is something lost on the man who placed his hand on a Bible and took one to uphold our liberties, freedoms, and responsibilities as outlined in the Constitution.

On this issue he was also factually wrong. And given the extreme amount of detail that goes into any Presidential proclamation, a safe wager would be to say, that he knew he was not speaking the truth. The matter of monetary reimbursement was publicly stated by the American Medical Association within 24 hours. No doctor ever receives even a $1000 for the amputation of a foot. They also do not receive it "immediately." The facts according to the AMA are that reimbursement for amputations are slow in coming and average between $500-$700.

And then there was of course his grandmother, who he implied during the campaign was a racist, whose very hip replacement surgery--fully covered by her own insurance plan--he questioned as to whether it was necessary or not, because of her pre-existing condition:

“I don’t know how much that hip replacement cost,” Obama said in the interview. “I would have paid out of pocket for that hip replacement just because she’s my grandmother.” Obama said, “You just get into some very difficult moral issues when considering whether to give my grandmother, or everybody else’s aging grandparents or parents, a hip replacement when they’re terminally ill. That’s where I think you just get into some very difficult moral issues.”

So by his own thinking, and now admission, had it been left to a public option or single-payer Government-run plan, there is a strong possibility she would have been denied coverage for her hip replacement because of her pre-existing condition.

But wasn't that one of the massively huge problems his public option plan was supposed to prevent?

So is everyone else's granny supposed to die in misery with a crumbling, dysfunctional hip, just because they are sick with something else?

Is this the utopia that Obama's health care plan is supposed to usher in?

Does anyone besides me feel the least bit queasy that in order to convince us the President has to resort to illustrations of unnecessary amputations in order to show us the rightness of the need?

Does his confusion between $500 and $50,000 cause anyone else who is struggling with all their might to pay their bills to shudder at his clarity on the numbers in a system he wants to spend $3,000,000,000,000 on?

These are important questions, and I desperately hope that while he's living it up on Martha's Vineyard this week that he works in a little time to consider them, you know... In between the wine and cheese events...

42% of CA Homes Under Water :(

2009-08-20T14:38:00.000-07:00

42% of California loans under water
August 19th, 2009, 12:01 pm · 57 Comments · posted by Jeff Collins

California had the nation’s fifth-highest percentage of home loans that are higher than the value of the homes they’re financing.

According to Santa Ana-based First American CoreLogic, : 42% of all loans were upside-down, or under water, as of June 30.

That compares to Nevada, where two out of every three home loans were under water; Arizona and Florida, where about half were; and Michigan, where 48% households owe more than their homes are worth.

Nationwide, the percentage of homes with “negative equity” was 32.2%, First American reported. The real estate data management firm also said:

More than 15.2 million U.S. mortgages, or 32.2 percent of all mortgaged properties, were under water.
June’s negative equity share was slightly lower than the 32.5 percent as of the end of March, reflecting a flattening of monthly home price changes.

Click to enlarge
As of June, there were an additional 2.5 million mortgaged properties that were approaching negative equity. Negative equity and near negative equity mortgages combined account for nearly 38 percent of all residential properties with a mortgage nationwide.

* The combined property value for under-water loans was $3.4 trillion. That’s the
total property value at risk of default.
* In California, the combined value of homes with negative equity was $969 billion,
followed by Florida ($432 billion), New Jersey ($146 billion), Illinois ($146
billion) and Arizona ($140 billion).
* In numerical terms, California (2.9 million) and Florida (2.3 million) had the
largest number of negative equity mortgages, accounting for 5.2 million, or 35%,
of all negative equity loans.
* Los Angeles homes that were under water had a combined value of more than $310
billion, followed by New York ($183 billion), Miami ($152 billion), Washington,
D.C., ($149 billion) and Chicago ($134 billion).

Negative equity can occur because of a decline in value, an increase in mortgage
debt or a combination of both.

US Hone Foreclosures set another Record in July

2009-08-13T08:03:00.000-07:00

U.S. home foreclosures set another record in July
Thu Aug 13 12:12:48 UTC 2009

By Lynn Adler
NEW YORK (Reuters) - U.S. home loans failed at a record pace in July despite ongoing federal and state programs to avoid foreclosures, which have severely strained housing and the economy.

Foreclosure activity jumped 7 percent in July from June and 32 percent from a year earlier as one in every 355 households with a loan got a foreclosure filing, RealtyTrac said on Thursday.

Filings -- including notices of default, auction and bank repossession -- have escalated with unemployment.

"July marks the third time in the last five months where we've seen a new record set for foreclosure activity," James J. Saccacio, RealtyTrac's chief executive, said in a statement.

"Despite continued efforts by the federal government and state governments to patch together a safety net for distressed homeowners, we're seeing significant growth in both the initial notices of default and in the bank repossessions."

More than 360,000 households with loans drew a foreclosure filing in July, a record dating back to January 2005, when RealtyTrac started tracking monthly activity.
Notices of default, auction or repossession have reached nearly 2.3 million in the first seven months of the year -- with more than half a million bank repossessions, the Irvine, California-based company said.

Making timely payments keeps getting harder for borrowers who have lost their jobs or seen their wages cut.

The unemployment rate is 9.4 percent and President Barack Obama has said he expects it will hit 10 percent.

Obama's housing rescue is gaining traction in altering terms of loans for struggling borrowers, but slowly.

Earlier this month the U.S. Treasury Department detailed the progress of the top servicers in modifying loans and prodded them to step up efforts to stem foreclosures.

SUN BELT STILL SUFFERING
States where sales and prices surged most in the five-year housing boom early this decade remain hardest hit.

California, Florida, Arizona, Nevada accounted for almost 57 percent of total U.S. foreclosure activity in July.

Illinois had the fifth-highest total filings, spiking nearly 35 percent from June, in an example of how moratoriums often delay rather than cure an inevitable loan failure.

Default notices spiked by 86 percent in July, from artificially low levels the prior two months. A state law enacted on April 5 gave delinquent borrowers up to 90 extra days before foreclosure started, RealtyTrac said.

Michigan's foreclosure activity fell 39 percent in July from June, mostly due to a 66 percent drop in scheduled auctions. A state law that took effect July 6 freezes foreclosure proceedings an extra 90 days for homeowners who commit to work on a loan modification plan.

Other states with the highest foreclosure filing totals last month included Texas, Georgia, Ohio and New Jersey.

Nevada had the highest state foreclosure rate for the 31st straight month, with one in every 56 properties getting a filing, or more than six times the national average.
Initial notices of default fell 18 percent in the month, with a new Nevada law taking effect on July 1 requiring lenders to offer mediation to homeowners facing foreclosure. Scheduled auctions and bank repossessions each jumped more than 20 percent, however, boosting overall foreclosure activity in the state by 4 percent from June.

California, Arizona, Florida, Utah, Idaho, Georgia, Illinois, Colorado and Oregon were the other states with the highest foreclosure rates.
(Editing by Kenneth Barry)

1/2 of US Mortgages Underwater by 2011

2009-08-05T15:32:00.000-07:00

About half of U.S. mortgages seen underwater by 2011
Wed Aug 05 21:12:32 UTC 2009

By Al Yoon
NEW YORK (Reuters) - The percentage of U.S. homeowners who owe more than their house is worth will nearly double to 48 percent in 2011 from 26 percent at the end of March, portending another blow to the housing market, Deutsche Bank said on Wednesday.

Home price declines will have their biggest impact on prime "conforming" loans that meet underwriting and size guidelines of Fannie Mae and Freddie Mac, the bank said in a report. Prime conforming loans make up two-thirds of mortgages, and are typically less risky because of stringent requirements.

"We project the next phase of the housing decline will have a far greater impact on prime borrowers," Deutsche analysts Karen Weaver and Ying Shen said in the report.
Of prime conforming loans, 41 percent will be "underwater" by the first quarter of 2011, up from 16 percent at the end of the first quarter 2009, it said. Forty-six percent of prime jumbo loans will be larger than their properties' value, up from 29 percent, it said.

"The impact of this is significant given that these markets have the largest share of the total mortgage market outstanding," the analysts said. Prime jumbo loans make up 13 percent of the total market.

Deutsche's dire assessment comes amid a bolt of evidence in recent months that point to stabilization in the U.S. housing market after three years of price drops. This week, the National Association of Realtors said pending home sales rose for a fifth straight month in June. A widely watched index released in July showed home prices in May rose for the first time since 2006.

Covering 100 U.S. metropolitan areas, Deutsche Bank in June forecast home prices would fall 14 percent through the first quarter of 2011, for a total drop of 41.7 percent.

The drop in home prices is fueling a vicious cycle of foreclosures as it eliminates homeowner equity and gives borrowers an incentive to walk away from their mortgages. The more severe the negative equity, the more likely are defaults, since many borrowers believe prices will not recover enough.

Homeowners with the riskiest mortgages taken out during the housing boom have seen the greatest erosion in equity, in part because they were "affordability products" originated at the housing peak, Deutsche said. They include subprime loans, of which 69 percent will be underwater in 2011, up from 50 percent in March, Deutsche said,
Of option adjustable-rate mortgages -- which cut payments by allowing principal balances to rise -- 89 percent will be underwater in 2011, up from 77 percent, the report said.

Regions suffering the worst negative equity are areas in California, Florida, Arizona, Nevada, Ohio, Michigan, Illinois, Wisconsin, Massachusetts and West Virginia. Las Vegas and parts of Florida and California will see 90 percent or more of their loans underwater by 2011, it added.

"For many, the home has morphed from piggy bank to albatross," the analysts said.
(Editing by Dan Grebler)

Mortgage modifications moving at snail's pace

2009-08-04T13:47:00.000-07:00

Mortgage modifications moving at snail's pace

Bank of America, Wells Fargo get low marks on plan to help homeowners
The Associated Press
updated 9:48 a.m. PT, Tues., Aug 4, 2009

WASHINGTON - The government's $50 billion program to ease the foreclosure crisis is helping only a tiny fraction of struggling homeowners.

As of July, only 9 percent of eligible borrowers had seen their mortgage payments reduced. And a progress report on the plan Tuesday showed that 10 lenders had not changed a single loan.

Bank of America Corp. and Wells Fargo & Co. — which have received billions in federal bailout money — were below average. BofA, which did not immediately comment, modified 4 percent of eligible loans, and Wells Fargo 6 percent. And Wachovia Corp., which was taken over by Wells Fargo last December, modified just 2 percent.

"We know we've fallen short of our customer service goals in some cases," Mike Heid, co-president of Wells Fargo's mortgage unit, said in a statement. The company aims to sign up most borrowers for the Obama plan with one phone call and plans to send customers a trial offer within two days.

Foreclosures, meanwhile, continue to rise. About 1.5 million households received at least one foreclosure-related notice in the first half of this year, according to RealtyTrac Inc.

"There are certainly more foreclosures going on in the country then there are modifications — by a long shot," said Bruce Dorpalen, director of housing counseling at Acorn Housing, a nonprofit housing group. He said his group has intervened to prevent about 500 foreclosure sales in cases where borrowers wanted to be considered for the Obama plan.

There are 38 companies participating in the program, and some noticeable holdouts that control 15 percent of outstanding mortgages. Litton Loan Servicing, owned by Goldman Sachs and HomEq Servicing, owned by Barclays PLC, have yet to join.

So far, more than 400,000 offers have been extended to 2.7 million eligible borrowers who are more than two months behind on their payments. More than 235,000 of those borrowers have enrolled in three-month trials.

"We think they could have ramped up better, faster, more consistently and done a better job serving borrowers and bringing stabilization to the broader mortgage markets and economy," said Michael Barr, the Treasury Department's assistant secretary for financial institutions. "We expect them to do more."

But the government is partly to blame for the languid start. The administration rolled out the guidelines gradually this year. Much of the program was not finished until mid-May, and the guidelines were updated again in early July.

On track
The administration maintains it is still on track to meet its goal of helping up to 4 million homeowners by 2012, and last week extracted a verbal promise from the mortgage industry to reach 500,000 borrowers by Nov. 1.

American Home Mortgage Servicing and PNC Financial Services Group Inc. were among the companies that had a zero next to their names on Tuesday's report.

David M. Friedman, the president and CEO of American Home Mortgage Servicing, explained that his company started the program on July 22, and expects to help 60,000, or about 40 percent of its borrowers.

PNC, which owns National City Bank, was up and running in early July, and the company said, "there are loan modifications in the process."

The best results among the large loan services came from Saxon Mortgage Servicers Inc. One in four of Saxon's eligible borrowers has a trial loan modification with a lower monthly payment to help the homeowner avoid foreclosure. Aurora Loan Services LLC, GMAC Mortgage Inc. and JPMorgan Chase all had one in five qualified borrowers in a trial loan.

For each homeowner who makes regular payments for three months, the loan servicer collects $1,000 from the government. The company is paid thousand of dollars more if the borrower stays current for three years.

Housing advocates cite numerous cases in which companies haven't followed the program's rules. And when borrowers are denied, they often aren't told why. In response to such complaints, the Treasury Department says Freddie Mac will be doing random audits to see if borrowers are being improperly rejected.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Widget

2009-07-30T07:13:00.001-07:00

Expect More Mortgage Mods

2009-07-13T07:15:00.000-07:00

The Mortgage Market
Expect More Mortgage Mods, Says Analyst
Maurna Desmond, 07.10.09, 12:20 PM EDT
The curious slide in restructurings won't last, according to Laurie Goodman.

Mortgage industry insiders and analysts have watched with confusion as loan modification activity trailed off in the last few months even as the Obama administration stepped up efforts to encourage servicers to rework troubled loans.

The curious slide in restructurings won't last, according to Laurie Goodman, an analyst at Amherst Securities. In a note to investors, she says modifications on subprime loans have risen steadily over last two years, from $5 billion in 2007 to $50 billion in 2008 and $39 billion in the first half of this year. The lull for the last two months is only temporary, she says, and "should increase more as servicers ramp up staff" to handle the president's $75 billion Home Affordable Modification Program (HAMP) modifications "more efficiently."

Yahoo! BuzzConcerns are mounting that taxpayer-funded efforts to ease the foreclosure crisis won't be sufficient to stem the next wave of bank seizures. Home prices are still sliding, down by a third from three years ago, and joblessness keeps rising, with unemployment at 9.5% in June. (See "Foreclosure Rate Stays on the Boil in May." )

The Treasury Department unveiled an expansion of the housing rescue plan Monday. Fannie Mae ( FNM - news - people ) and Freddie Mac ( FRE - news - people ) will be expanding the range of mortgages they'll consider to include more underwater loans. (See "Fannie And Freddie To Expand Mortgage Rescue.")

Goodman's analysis underscores the government's challenge in balancing the concerns of struggling homeowners, the real estate industry and investors who own the bonds that financed the home purchases in the first place. The quiet passage of a law in May that makes it illegal for investors to sue mortgage servicers who modify loans through the government program is also expected to increase the amount of workouts it produces. (See "Mortgage Investors Fear Safe Harbor Law.")

Along with predicting a surge in loan workouts, Goodman also cited evidence from data firm Loan Performance that services are stretching out the period between when a borrower stops paying his or her mortgage and when a property is foreclosed upon--from 15 months in June 2008 to 18 months in June 2009. Extending the amount of time it takes to complete a foreclosure benefits the borrower because they get to stay in their home and potentially get back on track, and it slows home price declines by delaying fire sales. She says the trend is likely to continue.

45 Million Americans- Who Are Those Guys?

2009-06-25T07:27:00.000-07:00

Larry Elder
Thursday, June 18, 2009

About 45 million Americans lack health care insurance. Or do they?
A pro-"universal health care" television host recently cited this widely accepted "fact." The number is bogus.

Here's the skinny.

Start with the math. We have 300 million Americans. Subtract the 45 million -- 15 percent of us -- with no health insurance. That leaves 255 million Americans, or 85 percent, with it.

And the insurance is lousy, right? Not according to a 2006 ABC News/Kaiser Family Foundation/USA Today survey. It found that 89 percent of Americans were satisfied with the quality of their own health care.

Nearly half of the 45 million fall in the category of my 26-year-old nephew. He smokes cigarettes, dates, eats out, goes to movies and, like all young people, lives through his cell phone. With a slight change in priorities, he could afford health insurance, the cost of which at his age and health starts at about $100 a month. Take a look at a Reason Foundation video of interviews with a bunch of non-health-insured 20-somethings.

These Gen Xers copped to dropping money on clothes, booze, nightlife, the latest tech gizmos and other things of interest to them. With a change in priorities, these young folks -- far more representative of those without insurance than the forlorn husband and wife sitting on a porch swing -- could both afford and qualify for health insurance. They simply consider it a low priority.

Millions more can access health care -- through SCHIP (State Children's Health Insurance Program), Medicaid or other government programs. But for whatever reason, 11 million people simply refuse to take advantage of them.
\
Several million other Americans who want insurance do, indeed, go without it -- for a time. Many are, however, between jobs, and most -- at some point -- will find employment that either offers health insurance or pays enough so that they can buy it. Millions more work at companies that offer health insurance, and for a few dollars out of every paycheck, they could add family members. They choose not to.
What about criminals without insurance? More than 2 million Americans -- with access to health care, by the way -- use jail, prison or penitentiary mailing addresses. And for every one behind bars, how many live among us who survive by theft, drug dealing, prostitution or some similar career path? Taxpayer health insurance for them, too?

So now we're down to the Americans without health insurance on a persistent, long-term basis. This is approximately 10-15 million, a big number to be sure. But does this warrant a government takeover of the entire health care system?

Lacking health care insurance is not the same as lacking health care . By law, most emergency rooms must provide health care -- to both legals and illegals. Yes, they stand in line, but no health insurance does not equal no health care.

Government (aka taxpayers) already pays half of our health care dollar, with programs such as Medicare, Medicaid, SCHIP and other federal and state plans. The stated goals are accessibility and affordability. Congress passed Medicare in 1965. In the 20 years before the program's inception, the cost of a day in a hospital increased threefold. In the 20 years following Medicare, a day in a hospital increased eightfold -- substantially higher than inflation over that period. Because of cost controls on government plans, providers increased the cost on everybody else.

So here's the question.

Do we allow a complete government takeover of the section of health care it doesn't already run, for 10-15 million or so without health insurance on a persistent basis? Again, 255 million Americans already have it. Many millions more could get it if they wanted to. And 89 percent of Americans are satisfied with the care they now receive.

What to do? Unleash the free market. Allow greater competition among health care providers. Decrease costly regulations that increase the price tag. Enable consumers to purchase insurance plans across state lines. Allow non-government-licensed paraprofessionals and others -- currently prevented by law from offering any medical services -- to provide low-cost care.

What about poor care and negligence? We have laws against force and fraud, as well as a common-law duty of care. That's why God created lawyers. (Just give us "loser pays.")

What about those who cannot afford it? What about those with pre-existing illnesses whose insurance applications carriers turned down? What's wrong with charity -- people helping people? America remains the most generous nation on the face of the earth. We donate more of our time and money than countries like England, Germany and Japan. During the Great Depression, before the New Deal, charitable giving skyrocketed. After the New Deal, charitable giving continued, but not at nearly the same rate. People expected government to address the problem, and taxpayers felt they gave at the office.

We can provide such "universal" coverage at a "low cost" -- through rationing. That means long lines, lower quality and less innovation for services that Americans currently take for granted.

Economists call it T.A.N.S.T.A.A.F.L. There ain't no such thing as a free lunch.

Our Government has Failed Us...

2009-06-13T19:06:00.000-07:00

Our Government Has Failed Us: NY’s AG Cuomo & the Loan Modification Industry
By Mandelman - Last updated: Saturday, June 13, 2009 -

“In many ways, the entire industry is a scam, in my opinion,” New York Attorney General Andrew Cuomo said during a news conference Tuesday. That’s what the second sentence of Randi Marshall’s Newsday article said on June 9th. Cuomo was announcing that he would be filing a suit against a company offering loan modification services to troubled homeowners on Long Island.

Then, proving to me that he was completely ignorant and insensitive about the situation he is investigating, Cuomo said: “No one has to pay for this service.” 

Well, alrighty then. At 48 years old I have just been shown the country’s first service that ranks up there with breathing oxygen. No one should have to pay for it. What’s wrong with this guy Cuomo? Did he famous father drop him on his head as a baby? I don’t remember his father being a moron.

To give you an idea of how nutty this whole loan modification industry thing has gotten, try to take Cuomo’s words above and substitute some other service for “loan modification”. Which other professional service should no one EVER have to pay for? Anyone? Anyone?

Why should no on ever have to pay to have someone with specialized expertise negotiate with their bank for a modification of their mortgage? This is the same clap-trap President Obama was yammering about a couple of months back. Why does anyone think this?

Let’s look at the options:

A. Call a Nonprofit Organization – When a consumer calls a nonprofit organization, the taxpayers are paying for the service… it’s not “free”. And some nonprofits don’t actually negotiate for the customer’s modification, they simply help the customer get their paperwork together and introduce them to their bank, which is kind of like getting tee’d up, if you ask me.

B. Call Your Bank Directly – When a consumer calls their bank directly, the bank is paid by the taxpayers to modify the mortgage… so it’s not “free”. In addition, I have in my possession, paperwork from Washington Mutual showing a “Loan Modification Fee” of $1500 that was charged to a customer in April for modification of their mortgage by the bank directly.

C. Do it Yourself – I’ve spoken to dozens of homeowners who have had their mortgages modified themselves and every single one of them said it was a very time consuming process for several months. That doesn’t sound free to me… but that’s just me.

D. Hire an Expert – When you hire a firm to help you obtain a modification, you pay that firm between $1,000 and $4,000 to handle the job for you. Is it just me, or does three grand for saving your home sound incredibly cheap? The truth of the matter is that if I knew nothing of this subject matter, and you asked me to guess at how much it would cost to hire a firm for such a purpose, I would guess twice that amount.

An Entire Industry is a Scam?

How can Cuomo have the opinion that “the entire industry is a scam”? I mean, even the Department of Real Estate and State Attorney General in California both readily admit that there are legitimate firms operating throughout California. In fact in California, the AG recently asked that all loan modification firms register with his office and post a bond in the amount of $100,000. Why would he do that if all are “scams”.

How can Cuomo, who holds such an obviously distorted view, now consider himself qualified to handle the investigation of loan modification companies? If a judge said something like this, wouldn’t he be disqualified from hearing cases related to loan modification companies as a result of his blatant bias?

With Cuomo being the State of New York’s top cop, doesn’t this statement open up any judgments that result from court proceedings against loan modification firms to appeal, at the very least? I’m not a lawyer, but it would seem that such a bias would taint any prosecution. Just like if a police officer is shown to be an outspoken racist, it taints that officers arrest of the minority group he arrests? No? Am I missing something here?

In Marshall’s article, it states that Cuomo “issued subpoenas to 13 other loan modification companies, for information on fees, contracts and marketing”. In his filing against Amerimod, Uniondale-based loan modification firm, Cuomo accused Amerimod of illegally charging upfront fees and producing misleading advertising sent to homeowners facing foreclosure.

I spoke with the owner of Amerimod, Salvatore Pane, who said that his firm has to-date, completed more than 10,000 loan modifications for homeowners. Other loan modification companies in the area confirm that Amerimod is one of the largest, of not the largest, so whether you believe Mr. Pane’s claim or not, it seems clear that his firm has certainly completed thousands of loan modifications for homeowners. That doesn’t fit my definition of the word “scam”. Marshall reported that Pane said that he is following state laws, which is the same thing he told me.

I feel I have to take a moment to clearly state my personal definition of the word “scam,” because I’m concerned that Mr. Cuomo has a different one in mind when he uses the word. To me a “scam” is when you get ripped off. You pay someone money and receive no value in return. You fail to receive what was promised you. That’s a scam.

And while I detest the idea of troubled homeowners being “scammed” by unscrupulous operators, it seems to me that Mr. Cuomo is much more concerned with someone being scammed out of three thousand dollars than he is someone losing their home to foreclosure. Why is it that I NEVER read a story of an enforcement action that states the number of homeowners that a loan modification company has saved?

Marshall’s Newsday article stated:

Cuomo’s effort, combined with proposals for expanded regulation, could mean a smaller loan modification industry, said housing counselor Joan LaFemina of the Community Development Corp. of Long Island. “My hope is that the people who stick with it really have integrity, but knowing the industry the way it is, there will always be those who operate under the radar and take advantage of the situation,” LaFemina said.

To her credit, Marshall also quoted Joseph Romano, office manager at Farmingdale-based National Modification Service, which has not been cited by Cuomo, as saying that Cuomo’s comment about the entire industry being a “scam” was “a great insult”. According to Marshall’s article, Romano said: “I stop foreclosure auction sale dates that normally would not be stopped if the client tried on their own.”

Hundreds of thousands of homeowners across the country call private sector loan modification firms every single day. They’ve all heard the same rhetoric we’ve all heard about these firms all being scams, yet they continue to call. Why would this be the case?

Because they know better, that’s why. They’ve tried to call their bank directly and they got nowhere. They didn’t qualify for the president’s program. They didn’t get what they needed by calling a nonprofit. So, when they feel they’ve exhausted all other options, they ask others, or hear an advertisement, and they call a private sector firm for help. If we allow this witch hunt to reduce or eliminate the number of legitimate private sector loan modification firms, we will have reduced the avenues available to today’s distressed homeowner… and that’s what leads to people being “scammed”.

When people feel they have nowhere to turn for help saving their home, they write a check to any port in the proverbial storm. It’s not really the con artists that make a scam an effective one. They need people in a near panic. When we’re in a panic, scared to death that we will lose our most treasured asset, we don’t make good decisions. We don’t feel that we have time to do our due diligence. And we get scammed as a result.

So, go ahead Mr. Cuomo. Continue to charge blindly forward, and in the name of protecting the people of New York, reduce the legitimate options that homeowners have for saving their homes from foreclosure. And what you will accomplish is more homeowners being scammed, not less. More homes lost to foreclosure, not less. And a longer and deeper economic recession that will cause even more homeowners to be at risk of foreclosure, which will only further destabilize our nation’s banks. Brilliant work, Mr. Cuomo, absolutely cracker-jack work.

Clearly, our state and federal governments have failed us at every turn in our nation’s still worsening housing crisis. And now they are abdicating their responsibility to regulate an industry’s legitimate operators… an industry that is so obviously needed by hundreds of thousands of homeowners… because they say they can’t tell a legitimate firm from an illegitimate one? Their job is to figure out how to properly regulate the private sector in order to help protect consumers, not engage in some biased witch-hunt that eliminates the good with the bad.

People have the right to representation if their property is to be taken away, Mr. Cuomo. Isn’t that what is states in the Fifth Amendment to the U.S. Constitution? “No person shall be deprived of life, liberty, or property without due process of law.” Doesn’t due process include the right to representation?

Nothing’s “free,” Mr. Cuomo. If there’s a God in Heaven, someone in you family… someone without your connections… will fall into our country’s widening abyss. They’ll be at risk of losing their home, and they’ll call their bank directly. Or try a nonprofit solution. And when they run out of options, they’ll call you for help. Then maybe you’ll wake up to what’s really happening in this country. Because you clearly have no idea what’s going on in “real life” today.

People needed help getting their mortgage in the first place, and they paid someone for that assistance. But for some reason, even in the face of overwhelming evidence to the contrary, your deficient brain has told you that we should all be able to negotiate a modification of that mortgage without help and without cost, something that’s much harder than obtaining a mortgage in the first place. You’re either a dolt, Mr. Cuomo, or you’re in someone’s pocket. There’s simply no other explanation I find plausible.

You want to know why we hear about the “scams,” but never the stories of private sector firms having saved homeowners from foreclosure? Because when we’re losing our home we feel ashamed and we don’t tell a soul outside our closest friends or family members. So, when a private sector firm saves our home from foreclosure, we have no one to tell, we don’t want to think about the horror of being at risk of losing our home… we just want to move on.

Think about that Ms. Marhall and Mr. Cuomo. Investigate that next time. I have. And I can tell you that your current understanding of the situation is inadequate and markedly incomplete.

Here’s a link to Randi Marshall’s Newsday article. I spoke with her a couple of weeks ago and she told me that she was only interested in writing a balanced piece on the loan modification firms. You’d have to judge that for yourself, but I do have to say that her article on Cuomo was more balanced than most.

FTC Seeking Consumers Advice om Nodification Practices.

2009-06-11T19:15:00.000-07:00

FTC is Seeking Consumers’ Advice on Mortgage Practices: Here’s Your Chance!
By Mandelman - Last updated: Monday, June 8, 2009

I’ve interviewed more than a hundred homeowners whose homes have been saved by private sector loan modification firms, and I know that there are certainly tens of thousands, if not more, that fall into this group. People that tried to call their bank directly, tried to call the government help-line, and were left with nowhere else to turn… until they found a private sector loan modification firm they could hire to help them get done what they’d been unable to do themselves.

I’m contacting everyone I’ve interviewed and asking that they write down their views and send them into the FTC before the deadline, WHICH IS JULY 15, 2009. And I certainly hope that others do the same.

1. If your house was saved by a firm you hired, here’s your chance to tell the federal government how important it is that such firms remain available to homeowners in need. No one is in favor of scammers that defraud consumers, but the government has been painting all firms with far too broad a brush. They need to crack down on the fraudulent operators and allow the reputable ones to continue to help consumers save their homes from foreclosure.

The banks clearly do not want homeowners to be represented when negotiating for loan modifications. They’d much prefer to negotiate with a homeowner directly or through a nonprofit counselor because those negotiations are likely to come out better for the banks.

But the most important point is that homeowners have a right to be represented by whomever they choose when negotiating with their lender. If they want to call a nonprofit or try to negotiate with their lender or servicer directly… that’s fine. But if they want to hire a firm to help them, well that should be fine too.

2. And if you’re someone who works in or owns a private sector loan modification firm, whether real estate licensed or a law firm, now is the time to talk to your clients whose homes you’ve helped save about sharing their stories with the FTC as well.

If you’re not sure how to approach your clients, or are concerned about doing so… CONTACT ME IMMEDIATELY because I can certainly help. My email is: mandelman@mac.com and there is absolutely no time to spare.

Many of you undoubtedly know my views on this subject, and I have to tell you that if you ignore this opportunity I will be beyond disappointed. Nothing you’re currently doing matters more than this does, so don’t even think about telling me you’re too busy to get to it.

The FTC has published two separate requests for comment about practices that could result in new prohibitions in these areas, depending on the comments the FTC receives. The FTC is asking for comment about for-profit services that offer to help borrowers obtain mortgage modifications. Among other things, the FTC is asking whether it should ban these companies from charging an advance fee.

If I had to hazard a guess, I’d have to say that there’ll be plenty of people with something negative to say, whether it’s true or not. People love the chance to complain, and they generally do so a lot more than they praise. So, it’s up to those that believe in protecting a homeowner’s right to hire a private sector firm to represent them in negotiations with lenders and serivcers, to go out of their way to make sure that this point of view is not absent from the comments the FTC receives.

A comment form can be sent to the FTC through July 15, 2009. Include the words Mortgage Assistance Relief Services Rulemaking, Rule No. R911003,” and make sure you DO NOT include any personal information because whatever you submit may be published.

A Closer Look at Climate Change

2009-05-25T09:55:00.000-07:00

The Intergovernmental Panel on Climate Change (IPCC) is widely regarded in the media as the ultimate authority on climate change. Created by two divisions of the United Nations, and recipient of the 2007 Nobel Peace Prize, its pronouncements are received as if they come down from Mount Olympus or Mount Sinai. The common presumption is that the IPCC has assembled the best scientific knowledge. Let’s take a closer look at this organization to see whether it merits such uncritical deference.

The IPCC’s Feb. 2007 report stated: It is “very likely” that human activity is causing global warming. Why then, just two months later, did the Vice Chair of the IPCC, Yuri Izrael, write, “the panic over global warming is totally unjustified;” “there is no serious threat to the climate;” and humanity is “hypothetically … more threatened by cold than by global warming?”

IPCC press releases have warned about increased concentrations of greenhouse gases in Earth’s atmosphere, yet Dr. Vincent Gray, a member of the IPCC’s expert reviewers’ panel asserts, “There is no relationship between warming and [the] level of gases in the atmosphere.”

A 2001 IPCC report presented 245 potential scenarios. The media publicity that followed focused on the most extreme scenario, prompting the report’s lead author, atmospheric scientist Dr. John Christy, to rebuke media sensationalism and affirm, “The world is in much better shape than this doomsday scenario paints … the worst-case scenario [is] not going to happen.”

Clearly, the IPCC does not speak as one voice when leading scientists on its panel contradict its official position. The solution to this apparent riddle lies in the structure of the IPCC itself. What the media report are the policymakers’ summaries, not the far lengthier reports prepared by scientists. The policymakers’ summaries are produced by a committee of 51 government appointees, many of whom are not scientists.

The policymakers’ summaries are presented as the “consensus” of 2,500 scientists who have contributed input to the IPCC’s scientific reports. “Consensus” does NOT mean that all of the scientists endorse the policymakers’ summaries. In fact, some of the 2,500 scientists have resigned in protest against those summaries. Other contributing scientists, such as the individuals quoted above, publicly contradict the assertions of the policymakers’ summaries.

To better understand the “consensus” presented in the policymakers’ summaries, it is helpful to be aware of the structure of the IPCC. Those who compose the summaries are given considerable latitude to modify the scientific reports. Page four of Appendix A to the Principles Governing IPCC Work states: “Changes (other than grammatical or minor editorial changes) made after acceptance by the Working Group of the Panel shall be those necessary to ensure consistency with the Summary for Policymakers or the Overview Chapter.” In other words, when there is a discrepancy between what the scientists say and what the authors of the policymakers’ summaries want to say, the latter prevails.

Here is a specific example: One policymakers’ summary omitted several important unequivocal conclusions contained in the scientists’ report, including, “No study to date has positively attributed all or part [of observed climate change] to anthropogenic [i.e., man-made] causes,” and “None of the studies cited above has shown clear evidence that we can attribute the observed changes to the specific cause of increases in greenhouse gases.” These significant revisions were made, according to IPCC officials quoted in Nature magazine, “to ensure that it [the report] conformed to a policymakers’ summary.”

Elsewhere, Rule 3 of IPCC procedures states: “Documents should involve both peer review by experts and review by governments.” In practice, IPCC sometimes bypasses scientific peer review, and the policymakers’ summaries reflect only governmental (political) review. This shouldn’t be surprising. After all, the IPCC is a political, not a scientific, entity. It is the “Inter-GOVERNMENTAL Panel on Climate Change,” not a “global SCIENTISTS’ panel.”

Also, “consensus” is a political phenomenon, a compromise, whereas scientific truth is not subject to obtaining a political majority. (Actually, 31,000 scientists have signed a petition protesting the “consensus” that human activity is dangerously altering the Earth’s climate. Consider that against the 2,500 scientists cited by IPCC—many of whom publicly refute IPCC’s press releases.)

To its credit, the IPCC debunks many of the alarmist exaggerations of radical greens. However, its scientific authority remains irreparably compromised by political tampering. When a U.S. State Department official writes to the co-chair of the IPCC that “it is essential that … chapter authors be prevailed upon to modify their text in an appropriate manner,” the political character of IPCC is plain.

The sponsors of the IPCC, the United Nations, and liberal American politicians all share the goal of reducing Americans’ wealth by capping our consumption of energy with a binding international climate change treaty. They are willing to resort to scientific fraud to further their goal. In the words of Al Gore’s ally, former Under-Secretary of State Tim Wirth, “Even if the theory of global warming is wrong, we will be doing the right thing” by reducing Americans’ consumption of fossil fuels. Keep that in mind whenever the IPCC is cited in support of a climate treaty.

Bringing Up The Rear!

2009-05-22T16:34:00.000-07:00

By Mandelman - Last updated: Friday, May 22, 2009 -

According to MSNBC.com, John Schoen “has reported and written about business and financial news for more than 25 years”. He produced a series titled The Mortgage Mess in 2008, and as a result won a Best in Business Journalism award from the Society of American Business Editors and Writers. That means, when it comes to the mortgage mess, he’s supposed to know something about it.

So, when I read his article of May 21st, on MSNBC.com, “Foreclosures stymie efforts to revive economy. Whittled-down housing bill leaves loan decisions up to banks, investors,” I was expecting to read something that would at least reference the private sector’s efforts to help homeowners get their mortgages modified.

But, alas… no. And that’s what qualified him to be this month’s star of Bringing Up the Rear.

In Schoen’s article, he reports that the foreclosures that continue to rise each month are “crimping a long-awaited economic recovery”. “Crimping?” Is that the way you see it, John? The 342,000 foreclosure notices that went out in April, on top of the 290,000 foreclosure notices received by homeowners in March, and the 243,000 in February, are putting a “crimp” our recovery? People are living through the unthinkable tragedy of losing their homes and all you can say is it’s crimping our economic recovery? You’re a real jackass, John, you know that?

To be fair, I had a hard time deciding who to bring up as this month’s Rear. There were so many from which to choose. One of the other contenders was Rick Sharga, a spokesman for RealtyTrac, the organization that tracks foreclosures across the country, and the source of the numbers I’m quoting. CNN/Money had this priceless quote from Rick on May 13th: “April was a shocker,” said Rick Sharga, “I would have bet on a dip because March foreclosures were so high.”

He would have bet on “a dip” in foreclosures? And what would you have me say about that? I can’t curse. Would you want to respond to I-would-have-bet-on-a-dip-Rick without being able to curse? Didn’t think so.

A “shocker”? A “crimp?” Listen guys, get a hold of yourselves. Our economy is melting down. Hundreds of thousands of families are going into foreclosure each month and that number is steadily rising. It’s a catastrophe of monumental proportion. And nothing is in place to stop our slide into a depression that will last for more years than anyone cares to consider. So, to refer to the foreclosure crisis as something that is “crimping” our recovery, or to be in any way “shocked,” that the numbers of foreclosures keeps rising, only shows that neither of you has any idea what’s going on in this country. Back away from the computer screen… perhaps a drive in the country would do you both some good.

Families are losing their homes. Do you know what that feels like… to lose your home… to have to tell your children that they will have to leave the safety of their own bedrooms… to be unable to sleep as the months go by… as you await that final day when you’ll load up the car and drive away from your home afraid to look back? Do you know what that’s like? Can you imagine it? To look into your wife’s eyes as she’s packing up the house, your family’s memories and dreams of the future fading away? And then to be told that it’s your own fault? You did this… you caused this? It’s your own decisions that are creating the scars that may never heal?

At least Schoen’s story described President Obama’s latest bill to help homeowners as being a “whittled down attempt,” but then he went on to say, “But the latest effort may not be strong enough to reverse the downward spiral that has gripped the housing market and the economy.”

It “may not be enough”? Like it “may” be enough? Okay, that’s enough Johnny-Boy. President Obama’s plan isn’t even designed to stop homeowners at risk of foreclosure. It’s designed to help homeowners who are mildly annoyed with their mortgage payments. The president is hoping that if he helps some people refinance at a lower rate, they’ll spend the extra money on stuff they don’t need, thereby helping the economy. It’s a ridiculous proposition, in light of everything else that’s happening, but I suppose it falls into the “it couldn’t hurt” category.

Schoen also correctly points out that the only provision of the latest bill that might have actually helped someone keep their home, known as the “cram down” provision, was “tabled”. The Democrats seem to want the provision, but the banking lobby clearly does not, so obviously that’s that.

He also points out that “homeowners stuck with unaffordable payments, or who now owe more than their house is worth, must slog through the red tape of negotiating a new loan with their lender,” and “slog” is obviously a euphemism for “get nothing done and lose your house”.

Schoen’s article included an example of “slogging” by stating that “Courtney Scott, 60, a retired nurse living in Atlanta, has been trying for over a year to get her loan modified”. I don’t know about anyone else, but in my mind, if you’re trying something for a year and it hasn’t yet worked… then it doesn’t Goddamn work. And just in case my mother’s reading this, don’t give me any of that “if at first you don’t succeed” drivel… after a year, I already “tried and tried again,” and the thing I’m trying is broken and won’t work.

RealtyTrac reports that they expect 2.4 million foreclosures this calendar year, which means the end of our national nightmare is nowhere in sight. The government’s response continues to be wholly inadequate. And the idea that homeowners can all simply call their bank directly and negotiate their own loan modifications is so preposterous that I can barely talk about it anymore.

The ultimate solution to the foreclosure crisis won’t be found without the private sector loan modification firms that represent homeowners in their negotiations with lenders and servicers. You know, the firms that Obama and Geithner claim to be “scams” simply because they charge a fee for their services.

The simple fact is that only small businesses in the private sector have the capacity to handle the volume of homeowners that need help. But Schoen manages to write an entire article about the foreclosure crisis without mentioning the private sector at all… not even once.

Schoen also regurgitated this month’s quote from Treasury: “The Making Home Affordable program, for example, gives cash incentives to lenders who provide foreclosure relief. In the first two months, some 55,000 homeowners were offered more affordable terms, according to the Treasury.”

Anyone that knows me knows that I hate being treated like I’m six. Offering people “more affordable terms” is more of the same blathering that we used to hear from the Hope-4-Homeowners program that after more than six months, succeeded in modifying only one mortgage. Our government has failed us at every turn in this housing led economic collapse, and the sooner we realize it, the better off we’ll all be.

It’s obvious to me that we shouldn’t be depending on anyone else to stop this crisis, and if you’re still unsure, here’s what Schoen’s article quoted Mark Zandi, chief economist at Moody’s Economy.com as saying: “We’re counting on the president’s loan modification plan to really kick in here. But it hasn’t yet, and we need to see it”.

Ladies and Gentlemen that’s the chief economist at Moody’s, Dr. Mark Zandi. And just so we’re clear, you and I, here’s an overview of Zandi’s bio and background:

Dr. Zandi received his Ph.D. at the Ivy League, University of Pennsylvania, where he did his research with Gerard Adams and Nobel laureate Lawrence Klein, and he received his B.S. from the Wharton School at the University of Pennsylvania.

His recent research has studied the determinants of mortgage foreclosure and personal bankruptcy, analyzed the economic impact of various tax and government spending policies, and assessed the appropriate policy response to bubbles in asset markets.

Mark is the author of Financial Shock, an exposé of the sub-prime financial crisis. He was an economic advisor to the John McCain campaign for president, has provided advice to the Obama administration, and regularly testifies in Congress. His most recent testimony has been on the economic impact of fiscal stimulus and the merits of providing government aid to the vehicle industry.

Okay, got it? Now that last quote once again… here’s Zandi on the foreclosure crisis:

“We’re counting on the president’s loan modification plan to really kick in here. But it hasn’t yet, and we need to see it”.

We certainly do, Mark. We certainly do.

Waiter… check please.

Your Right to Representation!

2009-05-20T16:18:00.001-07:00

By Mandelman - Last updated: Tuesday, May 19, 2009

As a citizen of the United States, you have a right to legal council and representation. That right is enumerated in the Sixth Amendment of the Bill of Rights in the US Constitution. In fact, it took a Supreme Court decision in Faretta v. California (1975) for the courts to permit defendants to represent themselves.

That right to legal counsel and representation falls under the concept of “due process,” which is essentially based on the concept of “fundamental fairness.” In broad terms, due process protects an individual so that he or she is not deprived of “life, liberty, or property” without a fair opportunity to affect the judgment or result.

I think about hiring an attorney, or in some instances a CPA, when I’m engaged in some type of dispute or negotiation and I feel there will be benefit from having an expert advocate my position. So, why is it when I call Chase, Wells Fargo, or frankly any of the other lenders or mortgage servicers, will I be told that I do not need to hire a “third party” to represent me in my negotiations related to a loan modification?

And I have to wonder, why does President Obama (who unless I’m mistaken is a lawyer himself) continue to insist that I do not need representation in the negotiations with my lender or servicer? He says that I should just call my bank on my own.

I understand that the president has provided generous funding to numerous nonprofits so that they can provide guidance to homeowners that are trying to obtain loan modifications. And I think that’s fine. Not everyone can afford to hire an expert to represent them in their negotiations with lenders or servicers, so in my view having a nonprofit alternative is a good thing. But surely not to the exclusion of private sector representation, right? He can’t mean that, can he?

It would seem obvious that there are numerous reasons for having expert representation when attempting to negotiate a loan modification with one’s lender or mortgage servicer. The most obvious might be that in all cases the lender will be protecting their own best interest, not yours, but there are others as well:

1.Homeowners who are delinquent on their mortgage payments and in jeopardy of losing their homes to foreclosure, are emotional, often scared, unknowledgeable, and lacking in objectivity. Hardly the traits with which one wants to enter into any negotiation.

2.Many people are simply not comfortable negotiating with their bank over the phone. As human beings, we are all different in our make-ups. For example, some people thrive on public speaking, while others list it among their greatest fears. Some personalities lend themselves to sales, while others do not. For some, confrontation is welcomed, and for others anything but. To say that we should all be equally skilled at calling our bank and negotiating a loan modification seems terribly insensitive at best.

3.There are almost always at least two different versions of some of the critical facts involved in a dispute, and frequently there are several versions of these facts. Attorneys are trained in how to best present the most salient facts, and how to counter arguments that present alternative views of the facts at hand.

4.What the average homeowner knows about his or her mortgage, or mortgages in general, you could put in a thimble. Want to know what I know about my own mortgage? The amount of the payment. And the bank to which the payment is made. That’s all. Any other questions, and I’d have to find the paperwork. It would seem to me to be common sense that, were I to enter into a negotiation with my bank over modifying the terms of my existing mortgage, I would more than likely benefit from having someone on my side of the table that knew a bit more about mortgages than I do. I would be negotiating with a bank, after all, and one would assume that they would know more about mortgages than the average homeowner.

The published data has shown that something like 60% of the loan modifications handled by banks end up re-defaulting just six months later, but that’s not really the overly surprising part of that statistic. What I find so surprising is that anyone is the least bit confused as to why that is the case.

Is it really so difficult to imagine that homeowners, scared to death that they will lose their homes to foreclosure, would agree to terms before they should have in an effort to “save” their most highly valued asset? I think most people would agree that a professional car dealer would be likely to get a better deal when buying a new car than the average consumer. So, why wouldn’t attorneys, or those expert in mortgages, be likely to negotiate a better deal on a mortgage modification than a consumer? Don’t be ridiculous, of course they would.

I understand much better than most that there has been an enormous amount of controversy over the issue of third parties helping consumers obtain loan modifications, and I think there’s no question at this point that it’s a case of buyer beware. All consumers should understand that they should never hire a firm to assist them in such an important endeavor without taking the time to check them out thoroughly, and I personally would never do business with someone I’m not totally comfortable dealing with, or whose office I haven’t personally visited.

But I personally would not choose to go it alone. And the dozens of homeowners with whom I’ve spoken at length that have tried it on their own have only strengthened that view. We have the right to representation in this country because we, as a society, recognize the importance of such representation. Negotiating a loan modification may not be done in a courtroom, but it is certainly a situation in which you may be deprived of “property” and for many people, such representation is what provides them with a fair opportunity to affect the judgment or result.

Here are excerpts from three stories of homeowners struggling to keep their homes that appeared in last Sunday’s New York Times:

Story #1:

“If I didn’t have children, I would just walk away,” said Ms. Auz, 40, while sipping a cup of tea at her pine kitchen table. Lines crease her forehead and she speaks in a patter of slow deflation as she describes the endless hours she spends on the telephone trying to get information from the bank that now services the loan. “It’s an ongoing nightmare.”

For now, many foreclosure counselors and agencies said they did not have enough resources to help all of the homeowners seeking help and they had trouble keeping up with changing programs and regulations. She contacted a nonprofit foreclosure counseling group that she said she found through the state’s foreclosure hot line. The group was supposed to restructure her mortgage, but she said her counselor sent the paperwork to the wrong fax number and the courts technically foreclosed on her home in February.

Story #2:

The Davises said they have tried a succession of strategies to renegotiate their loan. In August 2007, they contacted the Neighborhood Assistance Corporation of America in Jamaica Plain, Mass., which submitted an application to modify their loan. Darren Duarte, a spokesman for the group, said the Davises’s servicer, HomEq, did not cooperate. Brandon Ashcraft, a spokesman for HomEq, said that its recidivism rates track well below those reported by the larger industry.

Next, the Davises said, they contacted Julissa Soto, a housing counselor with the housing advocacy group Acorn, in Bridgeport. According to the Davises, Ms. Soto told them that if they sent a $10,000 “good-faith” payment, the bank would give them a deal starting at $2,813 a month with an 11 percent interest rate. But the Davises declined to pay that much money, fearing they would need the money if they had to move. Ms. Soto did not respond to telephone calls or e-mail messages.

Finally, the Davises hired Gary Seymour, a lawyer, who told HomEq its good-faith payment demand was too high. Mr. Ashcraft said that it is standard for HomEq to request these payments. On Mr. Seymour’s advice, the Davises filed for bankruptcy and sued their mortgage holder, Wells Fargo, arguing that it did not technically own the mortgage when it began foreclosure proceedings.

Story #3:

LAST fall, Donna Sikora threw herself a 50th birthday party in the home where she has lived for nearly 23 years. She has been trying to celebrate every holiday a little more because she doesn’t know when she may have to move out. Her bank, Washington Mutual, was supposed to take over ownership of her home in April. But Ms. Sikora, a hair stylist with a loyal New Canaan clientele, is determined to stay and has been fighting the foreclosure during her every spare moment. “I don’t eat. I don’t sleep. I’m losing my hair,” she said. “I really want to stay in this house.”

Washington Mutual allowed her to apply for the new mortgage with little proof of income, a now discredited practice that was common during the real estate boom.

Ms. Sikora said that she called Washington Mutual and asked to change the terms of her loan. She said she was told that if she missed two payments, the bank would enter her in a loan modification program. She simply had to wait for the bank to send her paperwork. But the paperwork did not arrive. When she called for information, she said, the bank told her that it had initiated foreclosure proceedings against her.

A spokesman for Washington Mutual, which now is owned by Chase, declined to comment on Ms. Sikora’s case, except to say that even though the foreclosure proceedings have begun, the bank is trying to renegotiate her loan, provided she can show she has enough income to support a $415,000 mortgage.

“In some cases, the borrower’s income is just not enough to afford the home,” said Tom Kelly, the spokesman. “We’re verifying the customer’s income and assessing whether a modification is possible that works for both the borrower and the lender.”

It’s still unclear whether she will in fact lose her home, but she is allowed to stay in it as her case makes its way through the legal system, as in any foreclosure. Ms. Sikora has mainly defended herself without legal representation, carrying her foreclosure paperwork to court in a springy cloth satchel with green and yellow polka dots. She has received some assistance from ACORN, a group that advocates for people with low or moderate incomes, but a lawyer from the bank’s law firm, Hunt Leibert Jacobson, has been even more helpful, she said, explaining court procedure to her before hearings.

Story #4:

I called Chase back in January, when I was 90 days past due. Another representative told me that I would automatically be evaluated for a loan modification. “You should just wait until you hear from one of our negotiators,” he told me politely.

Another two months passed without anyone calling, so I tried again in late March.

“I’m sorry, but our analysts have been backed up,” yet another Chase rep told me, even more politely than the previous one. She said each analyst had about 500 distressed borrowers to deal with, and it had been taking about five weeks for customers to get a direct response. The delays seemed to be getting longer.

I was actually beginning to feel sorry for Chase. It seemed to be so flooded with defaulting borrowers that it didn’t have time to foreclose on my house. Eight months after my last payment to the bank, I am still waiting for the ax to fall.

And that’s all I have to say about that. Ergo bibamus.

Posted in Loan Modifications • Tags: foreclosures, loan modifications, mandelman, martin andelman, ml-implode • Top Of Page

Comments
1.THEWATCHER says at Tue May 19, 2009 5:18 pm
Just got the verdict in from 2nd trust deed holder "CitiMortgage". Here is the scenario. 2 yrs ago borrower John acquired a 2nd td for $40K equity line, the first TD is for $290K with HomeQ. The property is 10K sq ft; the house is 2400 sq Ft. John has perfect credit 780 fico never late, lots of trades, no delinquencies ever. Educated Degree, waged W-2 and self employed Schedule C show stable income, reserves, minimal credit card debt, plenty of money in Stock holding of 401K with G.E... John’s home is the largest in the area of 3 miles easily. And he has never missed a payment, YET the area around him has been decimated in terms of home value. He was contacted by Citi Mortgage Las Vegas to increases his equity line to $175,000.00 STATED. The loan was originated in Vegas; the amount of income was relatively close in terms of his true Gross. John lost his W-2 job 6 months ago and has rapidly been exhausting his reserves not to mention the 401K has been hit to 1/5 of its previous value. He receives money for 1 child; his ex-wife is well off. He cares for 3 kids and a sickly mother since his fathers passing a year ago. With the fact that his Homes is considered the most valuable in its area (holding on to its value as there is an occupant paying and in good standing, maintaining the strongest market comp.) Unlike all the foreclosures in the surrounding area. How might Citi suggest or propose a solution to help John refinance his mortgage to an affordable interest rate?? With his income being half of what it was ($10,000.00) now only($5000.00, and being laid off. John can only afford 31% of his income to make the First TD unchanged and 38% on his back end ratio accounting for a payment to the 2nd td, which I might add must either be no more than $800. On a balance of $115,000.00 adjusted or a rate of 3% on $175,000.00. OR a total write off of the 2nd td. Did Citi or its Modification Case Mgrs see or offer such a solution.............NO! Instead they sent a letter stating that he did not qualify for the Government Program and was denied "Blatantly" The properties value is $280K He owes $290K on the first TD. He is one of the few home owners in the area. This is an example of Citi's incompetents’, the staff that are answering the phones are "receptionists" they document the call, and ask such vague inconclusive questions equal to the poor underwriting authority of a monkey with a stamp! I was swapped between National Collection Services in TX, to a "CitiMortgage" office in TX, Chicago, and India. Nobody had a clue. Random fax #'s are issued, random tel# are issued. Just serious lollygagging. So now that he has been declined and no solution was presented. It is obvious there is a lack of responsibility and organizational effort not to mention the incompetence? Citi is a prime example of how criminal it is to misguide and misinform a client, that their banking relationship with you is appreciated when indeed it is more like being held hostage and forced into financial ruin. They pushed and sold him a product on the basis of affordability (before expenses). NOTE: there is a rider in his loan Doc’s that states if they “Citi”misstated his income he/the borrower must contact Citi to inform them?? What?? Who reads this?? It didn’t even specify him or the loan amount or anything?? But now due too their own failures are unwilling to re-negotiate his loan terms for the sake of saving a long term customer or the neighborhood he resides. FYI……HomeQ did not only NOT return any calls but has failed to make themselves available to comment or address the needs of their client John. All that there is, is a answering machine. The next step is a full story and profile to be submitted to 3 News organizations so as to do a story and provide a face. CitiMortgage unwilling to aid or propose a solution to a “Single Self Employed Father of Three with sick mother, Steered and Strong armed into irresponsible loan product by bank whom they had relationship with for 20yrs!” This should have everybody looking at whom they bank with and what they are willing to do for them. With out deposits those unwilling to help won’t get their stock options or golden parachutes.

2nd Liens in New Fed Mod Program!!

2009-05-18T14:09:00.000-07:00

Second Lien Program to Help Homeowners Achieve Greater Affordability in Loan Mods

The Obama Administration is making new efforts to help bring relief to responsible homeowners under the Making Home Affordable Program, including an effort to achieve greater affordability for homeowners by lowering payments on their second mortgages.

“With these latest program details, we’re offering even more opportunities for borrowers to make their homes more affordable under the Administration’s housing plan,” said Treasury Secretary Tim Geithner. “Ensuring that responsible homeowners can afford to stay in their homes is critical to stabilizing the housing market, which is in turn critical to stabilizing our financial system overall. Every step we take forward is done with that imperative in mind.”

The Second Lien Program will work in tandem with first lien modifications offered under the Home Affordable Modification Program to deliver a comprehensive affordability solution for struggling borrowers. Second mortgages can create significant challenges in helping borrowers avoid foreclosure, even when a first lien is modified. Up to 50% of at-risk mortgages have second liens, and many properties in foreclosure have more than one lien. Under the Second Lien Program, when a Home Affordable Modification is initiated on a first lien, servicers participating in the Second Lien Program will automatically reduce payments on the associated second lien according to a pre-set protocol. Alternatively, servicers will have the option to extinguish the second lien in return for a lump sum payment under a pre-set formula determined by Treasury, allowing servicers to target principal extinguishment to the borrowers where extinguishment is most appropriate.

Making Home Affordable, a comprehensive plan to stabilize the U.S. housing market, was first announced by the Administration on February 18. The three part program includes aggressive measures to support low mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac; a Home Affordable Refinance Program, which will provide new access to refinancing for up to 4 to 5 million homeowners; and a Home Affordable Modification Program, which will reduce monthly payments on existing first lien mortgages for up to 3 to 4 million at-risk homeowners. Two weeks later, the Administration published detailed guidelines for the Home Affordable Modification Program and authorized servicers to begin modifications under the plan immediately. Twelve servicers, including the five largest, have now signed contracts and begun modifications under the program. Between loans covered by these servicers and loans owned or securitized by Fannie Mae or Freddie Mac, more than 75% of all loans in the country are now covered by the Making Home Affordable Program.

Continuing to bolster its outreach around the program, the Administration also announced today a new effort to engage directly with homeowners via MakingHomeAffordable.gov. Starting today, homeowners will have the ability to submit individual questions through the website to the Administration’s housing team. Members of the Treasury and HUD staffs will periodically select commonly asked questions and post responses on MakingHomeAffordable.gov. To submit a question, homeowners can visit www.MakingHomeAffordable.gov/feedback.html. Selected questions from homeowners across the country and responses from the Administration will be available at www.MakingHomeAffordable.gov/asked-and-answered.html.

Participating Lenders
So who’s participating in this program? No one knows for sure yet. Just like with the original Home Affordable Modification program, it will take awhile to flesh the details out and for servicers to develop programs and train their people.

FREE Loan Mods May be Hazardous to your Mortgage!

2009-05-14T12:40:00.000-07:00

AMR believes it is critical that distressed homeowners understand that a FREE loan modification is not always FREE. Listed below are important points to be aware of when working directly with your lender.

1. Loan modifications come in all shapes and sizes. Most of the news media, government agencies and non-profit organizations have little or no understanding of this. Many still believe a loan modification comes in one size fits all. Lenders are clearly aware of this perception and use it to their advantage when working directly with a borrower. Some Lenders use the term FREE to mask sub-par (higher interest and/or less principal reductions) loan modifications.

2. Lenders have a fiduciary and contractual obligation to protect their stockholders, not you. Your lender does not represent your interests, they represent their investors interests.

3. Given you are already contractually bound to your lender with your existing mortgage, working directly with you without you having professional representation is a clear conflict of interest.

4. Blanket wholesale loan modifications can put you, as a distressed home owner, in a worse situation by actually increasing your mortgage payment, or giving you a false sense of security with an initial lower payment, only to recast your mortgage a few months later with higher payments and now you are in a worse position, not being able to modify your loan for another 12 months.

5. Many lenders are seeking to mitigate their losses by getting borrowers to take a higher interest loan modification than what could have been structured with professional representation. In fact some Lenders have internal compensation structures that pay more to their representatives for keeping a loan modification's interest and remaining principal balance higher. There is nothing inherently wrong with this - their stockholders and investors expect this.

6. Many borrowers have no or very little understanding of exactly what the loan modification structure actually was they accepted, but are simply happy that it was FREE. In many cases this exuberance is shorted lived.

7. If a non-profit organization connects you to your lender, make sure that organization is also a fiduciary representing you. Many non-profit organizations may not understand that they may be walking you into the wolves' den.

8. If your Lender is offering a FREE loan modification, they will usually require your current financial scenario. In some cases whether the loan modification is FREE or not, borrowers can literally lose the opportunity because they were either unable to put together an a complete scenario; gave the their Lender an inaccurate scenario; or did not know how to legally maximize their scenario to take advantage of a Lender modification program.

9. Other things you can get for FREE, or can do directly without representation:

a. You can represent yourself in a court of law

b. You can technically perform surgery on yourself (in some cases)

c. You can perform you own dental work

d. You can buy your own home or secure a mortgage

e. You can do your own plumbing

* We recommend that you do not attempt to do any of these above.

Your home is the greatest investment you will most likely make. Make sure to consider all options when determining the best solution to assist you with any hardship you may be experiencing.

Have You Called the homeowner's HOPE Hotline?

2009-05-05T08:31:00.000-07:00

Have You Called the Homeowner’s HOPE™ Hotline?
By Mandelman - Last updated: Friday, May 1, 2009

The Homeowner’s HOPE™ Hotline is not new. It’s the same hotline that was available last year as part of President Bush’s Help-4-Homeowners program, which everyone now seems to agree was a spectacular waste of time and resources. Roughly seven months into the program, and HUD reported that just one mortgage had been modified, and after looking into it more closely, I was surprised that it did that well.

Help-4-Homeowners was clearly not a well thought out program. A voluntary program that lenders could chose to participate in, but certainly didn’t have to, it imposed several onerous conditions such as mandatory write downs by lenders of principal amounts owed by borrowers, and mandatory sharing of any equity upside realized by borrowers in future years. Essentially, lenders took one look and said, “We’d rather foreclose,” and borrowers concurred.

I’ve picked on the Help-4-Homeowners program quite a bit of late, mostly because a $320 billion government program that succeeds in modifying a single mortgage is inherently funny, and I cannot be expected to pass such things up. I’d still like to know how much of the $320 billion that was budgeted for the program remained in the kitty after six months, and I’m contacting Treasury to find out, but I’m betting that data is not available, or that their having “technical difficulties” producing it.

What is new about the Homeowner’s HOPE™ Hotline is that it’s now the number people are being told to call to get help under President Obama’s “Making Home Affordable” plan, which was announced on March 4, 2009.

The Homeownership Preservation Foundation (HPF), the organization that operates the Hotline, announced on March 19th, that more than 124,000 homeowners have called since the president announced the new plan’s availability, stating in their press release: “More than 13,500 homeowners have called the Hotline each day since the (president’s) announcement, about 3 times the average number of daily calls coming in to the Hotline prior to the release of the president’s program.”

Wow… 3 times the average of the least popular program in the government’s history, Help-4-Homeowners is nothing to press release, in my mind, but so be it. Let’s just hope the program produces a whole lot more than 3 times the results, which would be… hmmm… I don’t have my trusty HP handy… let’s see if I can… carry the 2… minus… oh yeah… 3.

Colleen Hernandez, HPF’s president and executive director, said in the press release: “The Obama administration’s new foreclosure prevention plan has clearly been a catalyst for homeowners to reach out for help.” Yes, Colleen… with something like I don’t know how many millions of Americans at risk of foreclosure these days, that’s the word I was searching for to describe the 13,500 calls a day: catalyst.

Hernandez went on to say: “The increase in calls showcases the growing demand for quality, free housing counseling services such as those provided by HPF and the Homeowner’s HOPE™ Hotline. Is that what it shows? Okay, if you say so. I’m willing to go along with you for the moment anyway.

The thing is, I’ve called this number quite a few times myself and my experiences have only been a catalyst for my penchant for sarcasm. But, because I don’t want to assume that my experiences are representative of a larger group, I want to know how everyone else is doing when they dial the number, which by the way is 888-995-HOPE™.

One of the things that concerns me is the way Ms. Hernandez talked about the need for even more patience than usual, saying: “The recent dramatic increase in calls to the hotline may require homeowners to be more patient than they have in the past.” (Italics mine.) More patient? More?

The last time I called the number, I waited on hold for 45 minutes and finally set the phone down and walked across the street for a piece of pizza… came back and the hold music was still playing through my phone’s speakers. So, in terms of my being able to generate even more patience than was required to stop myself from lying down in traffic after the last time I called, I’m not sure I was raised well enough to pull that together. I was in the Air Force, and I can wait in line for a long time, but after two hours of listening to some of the worst hold music I’ve ever been subjected to I prone to bleeding from my ears.

So, come on… I really want to know. Have you called 888-995-HOPE™? If you have, or eve3n if you know someone who has, would you mind telling me how it went? Leave me a comment here, just click on leave comment at the bottom of this article. I don’t care if it was a good, bad, or indifferent experience; I just want to keep tabs on how the whole answer the phone thing is part of Obama’s change platform, because in my lifetime the government’s never really impressed me with their ability to answer the phone. In fact, it’s always been kind of a weak spot.

But I can hope, right?

These days, with misinformation have taken the place of information in so many cases, I have to wonder… when Hernandez says 13,500 people have called each day, does she mean called… or answered?

Ergo Bibamus!

Posted in Mortgages, Political • Tags: Colleen Hernandez, economy, foreclosures, Homeowner's Help Hotline, loan modifications, Making Home Affordable Plan, mandelman, martin andelman, ml-implode, president obama • Top Of Page

Comments
1.Credit Unon Guy says at Fri May 01, 2009 2:22 pm
Heck I just called it for a giggle and got right through in less than a min. Now if I had my loan number I could have actually done something. Doh...

2.dcd says at Sat May 02, 2009 11:15 am
According to my clients, the phone number needs an extension:

1-888-995-HOPE-LESS.

3.mandelman says at Sat May 02, 2009 6:26 pm

Credit Unon Guy wrote:
Heck I just called it for a giggle and got right through in less than a min. Now if I had my loan number I could have actually done something. Doh...

Hey Credit Union Guy...
Well, the first part of your comment was encouraging... but I'm not sure that you say you would have been able to do something, that you would have actually been able to do something. I want to believe, I really do. Try again... see what they say when you ask a question... dig in a little deeper. I'd love to know how it goes...

1.mandelman says at Sat May 02, 2009 6:29 pm

dcd wrote:
According to my clients, the phone number needs an extension:

1-888-995-HOPE-LESS.

dcd...

And that's certainly been my experience. I've gotten through a couple times now... I call pretty much every day, but all I ever get when I do get through is someone reading me a script who is then totally unable to answer any questions. Then they put me on hold for 20 minutes and when they return they transfer me somewhere else where I wait on hold once again. Usually by the fourth transfer, I get disconnected.

1.4profitcounselor says at Sun May 03, 2009 3:18 am
Here is how screwed up the Hope-4-homeowners actually works......

You call the Hotline and you talk to a $10 an hour college student maybe 19 years old reading off a script that as this conversation happens, is focused solely on looking forward to the end of his/her shift determining what bar they are hitting for Ladies Night down town Dallas, TX, must be compellingly void of substance and naration at best.....

Gotta luv how taxpayer money goes towards the restaurant industry in the great State of Texas.

Or maybe rather the prize goes towards the greatly talented lobby Attorneys that actually managed to snow the biggest rig job contract from Washington to a call center consortium in Dallas, TX.

The parties and luxury yacht cruises departing Houston and Corpus Christi these days must be ladden in caviar and champaigne.

Where else do you dump tax payer money??? Not trying?

Please!!

LA Outlaws Modification Companies!

2009-04-30T11:13:00.000-07:00

Mortgage & Real Estate Brokers: Upfront Fees on Loan Modifications NOW ILLEGAL in Los Angeles
By Mandelman - Last updated: Wednesday, April 29, 2009 -

The Los Angeles City Council has made it illegal for mortgage and real estate brokers to charge an upfront fee when offering to help distressed homeowners obtain loan modifications. This effectively puts the loan modification business for real estate and mortgage brokers out of business. Gone. Bye-bye…

In case anyone thinks that’s not the case, let me explain.

Once a mortgage is modified, what would a loan modification company do if the customer didn’t pay the bill? Threaten to ruin the homeowner’s credit? You must be kidding. These are people that almost lost their homes. Their credit, you might consider, already leaves much to be desired. Take them to Small Claims Court? Sure, why not. As long as you understand that the best-case scenario is that you’re going to get like $20 a month, Small Claims Court might work out fine. Of course, when the homeowner doesn’t make the $20 payment, you’ll be going back to court or chasing a homeowner around for $20… well, plus late fees, so let’s say $24.

And please don’t tell me that people will pay their bill because they’re just that appreciative of the work that was done. Because I have a friend who runs a hospital, and 50% of his bills go unpaid all the time. Why do you think hospitals are so interested in what kind of insurance you have? Because they know that 50% of the patients won’t pay their bills, that’s why.

Helping someone with a loan modification without an upfront charge is something a nonprofit organization might do, but it’s not a business plan for a for profit entity… unless of course you follow the hospital pricing model and start charging $7,000 for a loan modification. Then when half don’t pay, you’ll be okay.

Yep, now that’s what I call a law that’s helping troubled homeowners. Thanks Mayor Villaraigosa! Good thinking there. You’re a smart one, I’ll give you that. Did you have anything to do with the Hope-4-Homeowners program, by any chance? Just wondering…

Here’s what I found to be the most amazing aspect of the story in the LA Times. It said: “Some of the services are legitimate, officials said, but others are not.” SOME are legitimate? OTHERS are not?

Let’s see… how many are there in a “some”. Hmmm… I can do this… wait… okay… minus 7, plus the sum, divide by 2… carry the 3… hmmm… SOME? How many is some? Is some “most”? Is some “many”? How can you put an entire industry out of business, an industry that is more needed at this moment than perhaps any time in history, on the basis of “some”?

And “OTHERS” are not? OTHERS? What’s the deal? Did we put people on the LA City Council that can’t do math? Do we have remedial learners on the LA City Council? No wonder Los Angeles is in such great shape. How many new roads do you think we need? “Some.” Oh, goodie.

Why is it that not one story in the entire country that claims that there are loan modification scams around every corner can come up with a number. I mean a number over say 22… or 71… or even 250, which is the number of investigations the California Department of Real Estate says it’s investigating as related to loan modification firms. The Illinois Attorney General was recently quoted as saying that she filed charges against two loan modification scams, but that’s not such a big deal. There are more than two Illinois governors in prison in Illinois, last I heard.

And why does nobody seem to notice, much less care, about the amazing lack of specificity on this issue? On April 6th, you might remember, Secretary Geithner and Attorney General Holder went on television to tell the country about all the scammers out there. And all they could come up with was five cases filed to halt loan modification scams and 71 companies they sent letters to because of “suspicious advertising”.

Oh yeah, and there was that little white lie they told about the 2100 cases of mortgage fraud the FBI is pursuing. In case you didn’t read my last column, I looked it up on the FBI’s Website and the only problem with the number was that it referred to mortgage fraud, which has very little to do with loan modifications. But other than that, you’ve still got the 5 and the 71 letters… not bad. Better than “some” and “others,” I suppose.

Mayor Antonio Villaraigosa, in an effort to prove beyond any doubt that he is both out-of-touch, and misinformed, referred to the new law as “a tool to help residents keep a roof over their heads.”

After carefully researching this issue for several months now, there is only one thing I know for sure: Reducing the avenues available for distressed homeowners to turn to for help with modifying their mortgages will NOT keep a roof over anyone’s head. Period.

Just so we’re clear, The LA Times story reported the following: “State law already prohibits mortgage consultants from demanding upfront fees from homeowners who are in default, the first stage of foreclosure. The new Los Angeles law, which the council approved unanimously, will apply those protections to all homeowners.”

Approved “unanimously”? Well, I’ve got to hand it to the banking lobby. Nicely done. You guys should work for the Swine Flu… you really know how to panic a population out without details. Keep it up and soon there will be no more private sector loan modification firms. I know you’ll be happy about that. Then, the millions of distressed homeowners will have nowhere to turn to for help that’s on THEIR side. They won’t qualify for Obama’s insipid little program, so they’ll have no alternative but to try their luck with the banks on their own. Scared. Unknowledgeable. Easy as pie to intimidate in almost every case. I’m sure that will work out real nice for you.

I wish I knew where banking lobbyists hung out after work. If any readers know, please send me a message. I’ve pretty much had it with them and I’m not above throwing a few of them around in a parking lot after a few beers. If anyone would like to join me, you know how to reach me. Come on… it’ll be like old times.

Hey banking geeks… I wouldn’t be too proud of your victory here, though. You only beat the private sector loan modification firms and that’s hardly an opponent. I’m trying to organize them in order to fight back and I can barely get a return call. Well, alrighty then… so this round goes to you. Big deal. So, you beat a bunch of starry-eyed optimists that thought it mattered whether they were doing a good job. Well, this will probably teach them a thing or two. And it does cost money to go to school.

The LA Times also said: “As the housing crisis has worsened, signs advertising such services have sprouted across Southern California.” Ohhhh… bad signs! Did they also outlaw bad signs? After this, I think I’ll go out with my baseball bat and kick a sign’s butt. Maybe that’ll make me feel better, but somehow I doubt it.

Lastly, the City Council also enacted a provision in the new law requiring a written contract between a mortgage consultant and a homeowner that allows the homeowner to cancel within seven days… which only proves that the Los Angeles City Council has NO CLUE what they’re doing, because that provision couldn’t possibly be met with any objection because there won’t be any firms left to object.

Mortgage Market commentary 4-28-09

2009-04-28T09:59:00.000-07:00

Mortgage backed securities (MBS) prices opened positive on concern the outbreak of swine flu may hamper global economic growth and that U.S. banks may need additional capital, stoking demand for safer fixed income assets, like MBS. Prices reversed course after a report showed consumer confidence increased more than forecast and investors focused on the record $35 billion 5yr note auction today; FNMA 4.0% coupon 100.70bps, +1bp off the intra-day high 100.82bps. In addition to today's auction, the Treasury will sell a record $26 billion of 7yr notes tomorrow and announce the size of 3, 10 & 30yr securities sold next week. Case-Shiller Home Price Index fell 18.6% in February compared to a record decline of 19% the prior month, might signal the market may be stabilizing. Low rates, falling prices and tax credits continue to support sales. Consumer Confidence posted its biggest one-month jump in 4yrs, to 39.2 from 26.9, led by a surge in future expectations, suggesting that pessimism may be easing and consumers see revovery ahead. This is adding to signs the recession may be easing and that recent gains in consumer spending will be sustained.

Mortgage Market Commentary 4/23/09

2009-04-23T08:01:00.000-07:00

Mortgage backed securities (MBS) prices are higher (rates lower) before the sale of $8 billion of 5yr inflation protected securities and a government announcement of how much the U.S. plans to raise in 3 auctions next week. The Treasury is expected to announce it will sell $99 billion in 2, 5, & 7yr notes as the administration is borrowing unprecedented amounts to finance bank bailouts, stimulate the economy and service a record deficit. The Fed will buy government securities today, its second round of purchases this week, in an effort to revive credit markets that have seized up. FNMA 4.0% coupon 100.12bps, +9bps and the high of the session. Jobless claims rose 27K to 640K, slightly higher than expected, indicating the labor market continues to deteriorate. The rate of new layoffs is severe but is at least steady, however continuing claims show increasing trouble, up 93K to a 12th staight record of 6.137 million collecting benefits. Record low mortgage rates and a foreclosure driven price plunge are making homes more affordable according to the National Association of Realtors (NAR) affordability index, which tracks mortgage rates, home prices and incomes. The index is at its highest level in 20 years. Existing Home Sales fell 3% to an annual rate of 4.57 million, lower than expected, dashing hopes of a spring housing recovery. The mediian sales price did increase a larger than expected 4% in March. The FHA's Hope for Homeowners program, while billed as beneficial to mortgage investors, may need retooling because it is proving ineffective in cutting losses because it focuses on lowering payments rather than reducing homeowner debt. The congressionally approved program was designed to help 400,000 borrowers when it started in October, has closed only 51 loans! That is one per state plus Puerto Rico. Not good at all.

Holder and Geithner LIED About Loan Modification Scams

2009-04-20T07:54:00.000-07:00

Holder and Geithner LIED About Loan Modification Scams
By Mandelman - Last updated: Monday, April 20, 2009 - Save & Share -

Today was a very sad day for me. Today was the day that I discovered the truth about something that I had been certain was just the result of the administration being misguided. They didn’t know, I reasoned. They didn’t understand, I hoped. They were misinformed, I believed. But I was wrong… they flat out lied to the American people… stood there in front of the cameras and, just like Bill Clinton when he wagged his finger and said that he did not have sexual relations with that woman… they knowingly lied. And, I have to admit, it saddens me.

Attorney General Eric Holder and Treasury Secretary Tim Geithner flat lied that Monday morning, April 6, 2009, when they addressed the nation to talk about the government’s response to the fraudulent loan modification scams that they claimed were sweeping the nation. They made it sound like the problem was an epidemic. They made it sound as if there was a fraudulent loan modification company around every corner. And they knew that the numbers they were using had nothing to do with loan modification scams.

Here it is from the Associated Press, but I’m sure you can find them on YouTube, if you’d like to see it come from the horse’s ass… I mean mouth:

Government cracking down on mortgage scams

by The Associated Press Published: April 6, 2009

Top federal and state officials on Monday announced a broad crackdown on mortgage modification scams, accusing “criminal actors” of preying on desperate borrowers caught up in the nation’s housing crisis.

Government officials say scammers are seeking to take advantage of borrowers in danger of default. The frauds often involve companies with official-sounding names designed to make borrowers think they are taking advantage of the Obama administration’s efforts to help modify or refinance 7 to 9 million mortgages.

Officials say such operations almost always are fraudulent, and that help is available for free from government-approved housing counselors.

“These predatory scams callously rob Americans of their savings and potentially their homes,” Treasury Secretary Timothy Geithner said Monday. “We will shut down fraudulent companies more quickly than before. We will target companies that otherwise would have gone unnoticed under the radar.”

The Federal Trade Commission has sent warning letters to 71 companies it says were running suspicious advertisements and has filed five new civil cases to halt illegal loan modification scams. Attorney General Eric Holder says the FBI is investigating about 2,100 mortgage fraud cases.

“If you discriminate against borrowers or prey on vulnerable homeowners with fraudulent mortgage schemes, we will find you, and we will punish you,” Holder said.

Did you catch the lie? Chances are you didn’t. I didn’t either at the time. It took me two weeks to realize that they had lied… intentionally lied. Here’s the lie:

Attorney General Eric Holder says the FBI is investigating about 2,100 mortgage fraud cases.

Is the FBI investigating about 2,100 mortgage fraud cases? You bet they are. It says so right on the FBI Website. Those 2,100 mortgage fraud cases were filed between 2003 and 2009. The problem is that the FBI’s Website also provides a definition of “mortgage fraud” and it has just about nothing to do with the fraudulent loan modification scams Holder and Geithner were talking about.

Here’s how the FBI defines “mortgage fraud crimes”:

Mortgage Fraud is defined as the intentional misstatement, misrepresentation, or omission by an applicant or other interested parties, relied on by a lender or underwriter to provide funding for, to purchase, or to insure a mortgage loan. Although no central repository collects all mortgage fraud complaints, statistics from multiple sources indicate that mortgage fraud is on the rise. Some industry explanations for this increase point to recent high mortgage loan origination volumes that strained quality control efforts, the persistent desire of mortgage lenders to hasten the mortgage loan process, the escalation of home prices in recent years, and the introduction of non-traditional loans which contain fewer quality control restraints such as low documentation and no documentation loans.

Well, that doesn’t sound like what they were describing, does it. I thought they were talking about fraudulent loan modification firms that were taking people’s money and not delivering a service. There must be something on the FBI’s site, right? And there is… all the way down at the bottom, after paragraph after paragraph describing numerous other violations. It reads:

Emerging Schemes

Foreclosure Fraud

Recent statistics suggest that escalating foreclosures provide criminals with the opportunity to exploit and defraud vulnerable homeowners seeking financial guidance. The perpetrators convince homeowners that they can save their homes from foreclosure through deed transfers and the payment of up-front fees. This “foreclosure rescue” often involves a manipulated deed process that results in the preparation of forged deeds. In extreme instances, perpetrators may sell the home or secure a second loan without the homeowners’ knowledge, stripping the property’s equity for personal enrichment.

While foreclosure scams vary, they may be used in combination with other fraudulent schemes. For instance, perpetrators may view foreclosure-rescue scams as a new method for fraudulently acquiring properties to facilitate illegal property-flipping and equity-skimming.

That’s it? “Escalating foreclosures provide criminals with the opportunity to exploit and defraud vulnerable homeowners seeking guideance…” You’re kidding me, right? No, I’m afraid I’m not kidding. That’s it and that’s all. After that, the FBI site goes into the following:

Home Equity Lines of Credit

Individuals and criminal groups are exploiting the home equity line of credit (HELOC) application process to conduct multiple-funding mortgage fraud schemes, check fraud schemes, and potentially money laundering-related activity. HELOCs differ from standard home equity loans because the homeowner may borrow against the line of credit over a period of time using a checkbook or credit card. HELOCs are aggressively marketed by lenders as an easy, fast, and inexpensive means to obtain funds. HELOC funds are normally withdrawn on an as-needed basis to conduct home repairs or to pay bills, but fraud perpetrators may withdraw the entire amount within a short time period. Lenders typically focus on property equity prior to funding HELOCs. As such, many lenders do not demand a full property appraisal or a full property title search.

So… the Attorney General of the United States, you know… the guy that replaced Attorney General Gonzalez, the AG who could not remember a darn thing… had a choice when preparing his speech that Monday morning on April 6, 2009. He could have told the truth.

After reviewing online and print ads nationwide, the FTC sent warning letters to 71 companies who may be deceptively marketing mortgage services.

In the last year, the FTC said it’s brought 11 law enforcement actions against operations accused of conning consumers. There’s also been plenty of state action in running down companies engaged in fraud. Illinois Attorney General Lisa Madigan filed two lawsuits recently against alleged Chicago-area mortgage rescue scams. “We have repeatedly found that these operations are swindling desperate homeowners out of money they can’t afford to lose,” Madigan said in a release.

Wow… 11 cases of deceptive advertising and 2 lawsuits filed in Illinois. And the Illinois AG’s phrasing would make me laugh, if it weren’t so entirely sad.

“We have repeatedly found that these operations are swindling desperate homeowners out of money they can’t afford to lose.”

Well, I suppose it’s true. “Repeatedly” does mean more than once… and so two lawsuits would qualify as having happened “repeatedly”. But, you know what I have to say about that: F#@k You.

No wonder they all looked so uncomfortable that Monday morning in front of the cameras. I noticed it right away, but I figured it was because they’re all kind of new at this… and they’ve got tough jobs. But it wasn’t that, was it Tim and Eric? You were uncomfortable because you knew that what you were saying wasn’t really the truth. Right guys? It’ll be better if you just admit it… ask Bill Clinton.

Eric Holder went on to say the following that day:

“For millions of Americans, the dream of homeownership has become a nightmare because of the unscrupulous actions of individuals and companies who exploit the misfortune of others,” Attorney General Eric Holder said in a release. “The Department of Justice’s message is simple: If you discriminate against borrowers or prey on vulnerable homeowners with fraudulent mortgage schemes, we will find you, and we will punish you.”

If anyone remembers my column about that day, you’ll remember that I made fun of that line. I put in parenthesis something about Holder being the black guy and therefore required to mention discrimination so many times each year. I wrote that line because I couldn’t understand at the time what discrimination had to do with fraudulent loan modification companies. Were they discriminating against certain people and only defrauding others. Strange, I thought… criminals so rarely discriminate as to from whom they steal.

I, like everyone else, was focused on the second word in Holder’s message, “millions”. “For millions of Americans…” Millions of Americans were being defrauded… that was the message. And so, as these two stalwarts of transparency were preparing their speeches, practicing their parts, working out the timing of when each would talk, they needed a big number. 11 and 2 wouldn’t do it. So they found the FBI’s 2,100 number and decided it would go unnoticed. After all, who would know the difference between loan modification fraud and “mortgage fraud”?

And it worked. You guys pulled it off. I didn’t even catch it until two weeks later… I might never have caught it, if it weren’t for Florida’s Attorney General who tried the exact same ploy. In one article, he claimed to be investigating 30,000cases of mortgage fraud, while in another article it said this:

Florida Attorney General Bill McCollum this month filed a civil lawsuit against a number of alleged loan-modification scam artists on behalf of scores if not hundreds of people, most of them facing foreclosure, who claim they paid upfront fees as high as $3,000 to have their mortgage terms improved so they could keep their homes. The suit alleges those services, which numerous non-profit organizations will do for free in tandem with lenders, were never delivered.

When I read that the first thing I thought was… “Wow, it’s pretty rare to see numbers measured in ‘scores’ these days.” And then… “scores, if not hundreds”? Which is it? And then I remembered the 30,000 cases reported by another Florida paper… that’s a pretty big spread, don’t you think: 30,000 or scores, if not hundreds? That’s when the whole thing started to stink up the joint… and I went to look at what Holder and Geithner had said.

And then I became sad. I know… some of you reading this will undoubtedly defend what was said as being okay for one reason or another, but you know what… save it. That’s not the kind of administration Obama promised… that’s politics as more than usual. And that’s the Attorney General, damn it. God damn it. I hated watching Bush appointee, Gonzalez say “I don’t recall” about a gazillion times. And I voted for Obama because at least I thought… “No way he’s going to appoint guys like that.”

He chose to use a number to make his point because he couldn’t come up with a legitimate number. He lied people… and if you can’t see that then you’ve really lost it. Want me to ask my mom? She’ll tell you… he lied.

So, after staring at the wall for about an hour, wondering why they would have chosen to create this fictional boogey man that was raping and pillaging throughout the land in the form of fraudulent loan modifications, I decided to see if I could find the impetus. If you’ve read my past articles, you know I have come to believe it was the banks that were behind it. Banks don’t want private loan modification companies negotiating mortgages for homeowners… because it costs them more money than if they could just abuse the homeowners directly. But how could I be sure… and then there it was… right in the Washington Post:

According to the Treasury Department’s Financial Crimes Enforcement Network, financial institutions filed an estimated 65,049 suspicious activity reports from 2007 through 2008, a 30% jump from 2006.

Did they now? Suspicious Activity Reports are known by the acronym “SARS” and they’re the kind of reports banks generally file with the IRS and Treasury when they suspect money laundering or tax evasion.

Well, what do you know… I guess all of a sudden the SARS work to report potentially fraudulent loan modification companies. Really? That’s a wild coincidence, don’t you think? And a 30% increase over 2006… the same year more loan modifications were being requested by all those FRAUDULENT loan modification firms?

So, what’s the deal? I thought the fraudulent moan modification firms were taking a homeowners money and deliver nothing in return. No? How could they all be delivering nothing in return if the banks filed 65,049 suspicious activity reports about these fraudulent loan modification scammers? I guess maybe they’re the kind of scammers that, before absconding with your cash, first go through the headache of actually trying to get your loan modified… then they go to Brazil.

Okay guys and gals in the Obama administration and you sleazebags at the banks as well… listen up. At first you were making me dizzy. Now you’re making me nauseous. Your story stinks. You’re causing people to lie to the American people. And all because you don’t want private loan modification firms to represent homeowners because you’d much prefer homeowners weren’t represented when attempting to negotiate a modification of their mortgages.

Not cool, people. Not cool at all.

Here’s a letter written by a real homeowner… I didn’t change a word… think of it as a P.S.

I was watching Fox News last night and saw their free loan modification story. They made it sound so simple and enticing that I could immediately tell that none of the people involved in the production, filming, or writing of the piece had ever tried to do a loan modification without an attorney. Well I have tried, and I’m writing this to say that even if I had completed my modification it wouldn’t have been worth the wasted time and aggravation spent pursuing it on a day-to-day basis.

In fact, the one thing I was waiting for was a couple testimonials from people that had done it themselves. Needless to say, there were no testimonials. I know why, too. Even if they had found someone that had seen their modification through to the end I’m pretty sure they wouldn’t be happy about it. Maybe relieved, but not happy. In my own experience after months of hold time, snotty people at my bank, and hundreds of unreturned calls all I wanted was for it to be over and I didn’t care whether it happened or not. I just wanted it over. Any testimonials like that would not have fit in to the sunny disposition of the report so in the back of my mind I knew I wasn’t going to be hearing from any success stories.

I’ve got to say, the piece actually upset me a bit because what was being said on the show was nothing like the reality of trying to get a do-it-yourself one done. I actually went to a couple non-profits that provided counseling and information but came away from them feeling like maybe I had taught them more about flying solo than they had taught me. At any rate, I didn’t walk out of one of those meetings feeling like I was loaded for bear and ready to represent myself in an actual negotiation. Part of that was because my mortgage was really complex with negative amortization and a bunch of moving parts that determined my interest rate.

Dealing with my bank was a pretty horrendous experience too. The bank wasn’t very helpful at all during the times where I didn’t understand what they were talking about or had questions on things like what to do next. A pretty common response was “We are your bank but we are also re-negotiating a contract you signed. It is not our job to walk you through the process to help you negotiate with us.” That seems to be a pretty common mentality as I found out from chatting with many people with similar experiences.

I should mention this as well. My house was fast coming up on a foreclosure so time was becoming more and more precious. The most wearing part of the whole thing was knowing that there was nothing I could do, being reliant on people that really weren’t interested in what happened either way.

It wasn’t until an acquaintance mentioned that (Intentionally omitted by article’s author) Law Center had done his loan mod that I first heard of the company. He said his was done by an attorney and considering that my payments were a bunch of months late that should think about using one too. By that point I was more than happy to pay whoever wanted to take over the job for me. I handed everything over to them and they got the loan mod done.

It just seems that there was so much naivety in the Fox News thing that I wanted to share my experience. I hope it helps.

Well… I’m pretty good with words and I could never say it any better than that. Take action people. Tell those in government… let the private sector help homeowners negotiate with their banks… regulate it… fine, but stop the administration’s campaign against private loan modification firms… before it ends up making the Obama administration look like you know who… Part 2.

HUD's H4H Modifies ONE Loan!!! But It's Free!!

2009-04-16T07:56:00.000-07:00

Mandelman - Last updated: Wednesday, April 15, 2009 -

Yes, you read that right… just one very lonely mortgage. Only 399,999 more to reach their goal!
Well, it’s been a long time coming in my opinion, but Brian Sullivan of Fox Business News has finally looked under the covers at HUD and found an Emperor missing his PJs. As it turns out, the Hope for Homeowners program, which had $320 billion in taxpayer dollars to spend as of last July 31st, and was supposed to benefit 400,000 homeowners at risk of foreclosure, has received 865 applications… and modified ONE MORTGAGE. Well, woo-hoo!

Apparently, Brian Sullivan interviewed HUD Secretary Shaun Donavan today, and during that interview Donavan disputed the number. But, Sullivan provided his source for the information and wonder of wonders, the information came straight from HUD and showed that exactly one mortgage has been successfully modified and endorsed by FHA under the Hope for Homeowners plan as of April 8, 2009.

Here’s the link to the email thread between Sullivan and HUD, boys and girls:http://briansullivan.blogs.foxbusiness.com/2009/04/09/hud-needs-to-check-their-numbers/

The Hope for Homeowners program was signed into law on July 30th, 2008 by then President Bush. It was set up to, according to the program’s Website: “help those at risk of default and foreclosure refinance into more affordable, sustainable loans. H4H is an additional mortgage option designed to keep borrowers in their homes.”

That’s right… it a government program designed to help homeowners avoid foreclosure. As in… Please sir… can I have some cheese. I have no idea how I’m going to do it, but if there’s a God, I’ll find out who that lucky homeowner is, because if I do I’m flying in for an on camera interview for sure.

So, I have a new idea for the federal government for their next help for homeowners program. I’m serious here, I think it would work much better and probably pay for itself too. Here it is:
The Federal Government has hidden 5 Golden Tickets inside chocolate Wonky Bars that are then distributed all over the United States. Whoever finds a ticket calls the government hotline and that’s when the clock starts. If the government answers the phone before they lose their house to foreclosure the government comes out, accuses the people who found the ticket of drinking fizzy lifting drinks, and pays off their next-door neighbor’s house instead! It would be fabulous, don’t you think? Like American Idol, or Survivor.

I even have a name I’d like to float out there: The Amazing Farce. Give it a moment… don’t rule it out right away. Let it sit with you… it might grow on you.

Okay, I’ll get back on track. The first question you have to ask yourself is… 865 applications? Wow. When you consider that there are millions of people out there at risk of foreclosure, how unpopular does a program that offers to save your house have to be in order to get 865 applications out of millions of troubled homeowners? I mean, out of a million people, you’d think more than 865 would buy bags of dog sh#t for a dollar.

The Hope for Homeowners program was scheduled to run from October of last year through September 30, 2011, so in all fairness maybe we should give it a chance. At this rate, by 2011 they could conceivably have modified… let’s see… carry the five… divided by three… hmmm… it’s hard to say… well… maybe as many as nine mortgages. Hey come one… nine’s not that bad. It’s a government program, remember. Besides, there’s good news, too. If they started with $320 billion, you’d have to think that they still have some of that money, right? Because if they don’t… like if we paid billions to modify one $210,000 mortgage that was $45,000 underwater, well then I’ll meet everyone at the U.S. Capitol next Wednesday at noon. And when I say everyone, I fully expect to see at least $250 million people on hand.

So, then I thought that maybe the problem is that not enough people have heard about it.
Brian Sullivan doesn’t think so though. He reported that, in recent testimony HUD official Meg Burns said:

“…between this aggressive educational campaign and the tremendous amount of publicity the program has received from the press, there is no doubt that homeowners in need of help are fully aware that it is available. In fact, since last September, the FHA call center has received more than 66,000 consumer and industry inquires regarding the program, which represents about 45 percent of all incoming calls.”

Well, alrighty then… it’s not that. Fair enough.

Sullivan also raised the possibility that too much knowledge might be the problem. The Hope for Homeowners program requires homeowners to share in any future price appreciation of their homes. HUD’s example shows a homeowner that participates in the program staying in his or her home for twenty years. The home’s price goes up by $70,000 after all those years and before selling the house, he or she has to write the government a check for $35,000.
The way Sullivan puts it, “In other words, the taxpayer receives compensation for the risk assumed.”

Sullivan says that HUD wants to change or eliminate this aspect of the program. He received an email from a HUD official who wrote:

“This refinance program needs modifications to make it more attractive to both homeowners and lenders. The Administration supports Congressional legislation designed to bring about those changes. Congressional reforms are in HR 1106 in the House and are being considered in the Senate as well.”

Okay, so they’re working on it. Don’t hate the program… it just needs to be… wait for it… modified? I’m willing to help in any way I can. If you’re with the government and want my help, just call the number I provide at the bottom of this article… and sit on hold until my 92nd birthday, you incompetent boobs.

Sullivan goes on to compare the government’s most embarrassing moment to a private-sector homeowner assistance program called the Hope Now Alliance. The private sector… hmmm… that couldn’t possibly have worked any better could it? I’ll look it up… oh here it is…
Washington, D.C. (March 30, 2009) – HOPE NOW, the private sector alliance of mortgage servicers, non-profit counselors, and investors that has been working aggressively to prevent foreclosures and keep homeowners in their homes, today announced that its members and the larger mortgage lending industry modified 134,000 mortgages in February, a 9 percent increase over the number of mortgages that were modified in January.

The combination of 134,000 mortgage modifications and 110,000 repayment plans means that, in February 2009, HOPE NOW members and the larger mortgage lending industry helped 244,000 at-risk homeowners (homeowners in danger of losing their homes) avoid foreclosure through one of these two mortgage solutions. This is the first time since HOPE NOW began to compile data in July 2007 that the number of foreclosure preventions has exceeded 200,000 for 6 consecutive months. This is a more than 30 percent increase over the last six months.
The HOPE NOW February data shows that modifications were more than half of all solutions provided to homeowners. And the number of foreclosures started in February increased from 217,000 in January to 243,000. Uh oh… what’s happening here? Foreclosures are still rising? Oh, don’t worry… President Obama has another government assistance program about to kick into high gear… so everything’s gonna’ be just fine.

Sullivan, however, skipped over the dark side of the Hope Now program.
The problem with Hope Now has always been the percentage of re-defaults. You know, people who get their mortgage modified, but then six months later end up in default again.
Remember, Hope Now is an alliance of lenders, which is a euphemism for the word banks. The alliance said it was on course to double the number of loan modifications it completes in 2009. But the group could not estimate how many of the homeowners it had helped fell back into delinquency.

So here we have yet another group of accountants that seems to have a hard time keeping track of numbers. Well, some numbers anyway. The numbers that make them look good they have on hand at all times. The other numbers… well… give us a minute… I’m sorry, we’re having some trouble… technical difficulties… can we get back to you on those?

Someone kept track though… the Office of the Comptroller of the Currency, and the Office of Thrift Supervision. Well, thank heavens for them, huh? According to the LA Times on December 26, 2008:

“More than 50% of loans modified this year were delinquent again within six months, according to a joint report Monday from two federal bank regulators, the Comptroller of the Currency, and the Office of Thrift Supervision. There are problems with both industry and government programs. For instance, Hope for Homeowners, run by the Federal Housing Administration, has been criticized as too expensive and onerous to substantially reduce the problem.”
“I think we all believe that more efforts can be made by industry and government to help homeowners,” said Tom Deutsch, deputy executive director of the American Securitization Forum. “Ultimately the macroeconomic conditions have made it a much more challenging environment.”

Darn the luck. Now it’s a much more challenging environment. Rats. How in the world are our Congressional Keystone Cops ever going to be able to accomplish anything in a much more challenging environment? They’ve been tripping all over themselves in the much less challenging environment. Do they have any time-outs left?

According to U.S. Comptroller John Dugan:

“Some 53% of borrowers with loans modified by Hope Now during the first three months of 2008, and 51% of those with loans modified in the second quarter could not keep up with payments within six months…”

Holy Option-ARM, Batman. Six months later? Come on, what’s the problem here?
I wonder why the lender alliance loan modifications have such a high default rate? Hmmm… let’s see. The lender works with the troubled borrower, trying the entire time to GET AS MUCH MONEY AS POSSIBLE OUT OF THE TROUBLED BORROWER’S POCKET. That’s what’s happening nimrods! Do you need to conduct a government study to figure it out? Think we should call Harvard, or put the NASA guys on it?

It would be like if we got rid of defense attorneys and then sat around wondering why so many more people were getting convicted and going to jail. “It’s weird, isn’t it? I just can’t figure it out. All of a sudden everyone’s losing in court. Do you think it’s the full moon? Spooky.” Morons.
Obviously, it’s time for a little Mandelman University. I’ll be your professor… take your seats…
“Well, excuse me… hey fellas… guys and gals… psssst… over here… it’s me… Mandelman. That’s right… the guy with the fully developed adult brain. There is an answer here. You could spend a weekend figuring out how to regulate the private sector so companies could handle the negotiations for the troubled homeowners. They’d jump in for sure. They’d make a profit and guess what else? Anyone? Anyone? No one? Come on people, didn’t anyone do the reading assignment?”

“Well, they’d hire people, that’s what! Yes they would. It’s funny how capitalism works isn’t it? Oh, President Obama, I’m glad you’re here. Just back from Europe are you? Yes, well it did look fun. You’re just in time for our free market capitalism class. Here’s how it all works. Barney, sit the F#@k down and pay attention. Nancy, put the make-up away and give me that gum.”
“Don’t worry people… you get to regulate stuff. Plenty of regulation, lots of stuff to keep tabs on, or fail to keep tabs on. It’ll be just like the old days… only this time some of you will actually do your jobs! Yes, I know that’s going to cut down on your free time, but hey… it’s only a couple of hours a day, you can handle it. Just think, you’ll actually be able to tell stories about all the hard work you’re doing when it comes time for re-election season. Oh, it’s always re-election season. That’s right, I forgot.”

“Why do you all look so sad? Oh, I know… it’s sad to see a problem go away. Well, yes it can be. We’ll all miss it. But you can always screw something else up next year… come on… let Iran build a nuke. See I knew that would cheer you up. See there’s still some fun to be had. And if you can’t wait for that one, monkey around with health care and education for a while… that’ll be a kick, won’t it. See, all smiles… I’m glad I could help.”
Ergo Bibamus!
Mandelman Out.

Mortgage Market commentary 4-14-09

2009-04-14T08:06:00.000-07:00

Mortgage backed securities (MBS) prices rose (rates fall) after release of economic reports showed retail sales unexpectedly fell in March and wholesale prices dropped; also the Fed prepares to buy more government debt today. FNMA 4.0% coupon 100.16bps, +7bps and the high of the session. March retail sales were surprisingly negative, down 1.1% and sharply below the market forecast. Sales were weak across the board; the fact that declines were widespread by components shows the consumer back into retreat mode, calling into question the "green shoots" theory that recovery is underway. Less consumer spending heading into the 2nd quarter means the recession is likely to persist. Producer Price Index (PPI) fell 1.2%, well below the consensus, pulled down by an unexpected fall in energy costs, indicating the recession is keeping inflation under control. Credit is starting to move again as bankers gain confidence that the worst of the financial crisis is over, bouyed by the Fed's programs to relieve disruptions in markets and restore the flow of credit. Libor (3month) rates fell to 1.12% today from 1.32% a month ago. Consumer credit costs are high by historical standards compared with what banks pay to borrow, an obstacle that must be removed to fix the economy. FYI, global losses and writedowns have swelled to $1.29 trillion!

Obama's Campaign Against Mortgage Modifications

2009-04-13T07:28:00.000-07:00

Obama’s Campaign Against Mortgage Modifications
By Mandelman - Last updated: Saturday, April 11, 2009 -

President Obama has apparently embarked upon a campaign to put all private sector loan modification firms out of business because some are apparently scams. It’s a curious approach when you consider that there have been and continue to be countless stock market related scams in this country, but I can’t remember a president telling me not to pay my financial advisor as a result.

Speaking on the subject of his housing rescue plan, which will, once it’s available, offer to modify certain mortgages, the president has said on several occasions: “If you have to pay, walk away.” So, the fact that they charge a fee makes them a scam? And here I always thought that it was charging a fee and not delivering a service that was a problem. Just the fact that a firm charges a fee… well, not so much, right?

If the president is right about the whole charging a fee issue, then why does the California Department of Real Estate tell homeowners that they should be sure to use a loan modification firm that uses its “Advance Fee Agreement”? I’m confused.

President Obama has also said that people don’t need to pay a fee to have their loan modified because they can simply call their banks directly. I was curious about this, so I went to IndyMac Federal’s Website that advertises their new streamlined loan modification service. Here’s what it says in the first three paragraphs:

“The goal of this streamlined loan modification program is to achieve improved value for IndyMac Federal. IndyMac Federal will only make modification offers to borrowers where doing so will achieve an improved value for IndyMac Federal.”

Unusually forthcoming, if you ask me. The bank is telling you right up front that they’re happy to negotiate a modification of your mortgage in their best interests, certainly not yours. And that’s what they should be doing, I suppose. But as a homeowner, don’t I want someone who knows mortgage modifications to be negotiating on my behalf?

Telling me I don’t need to pay an expert to represent me with my bank seems like the police telling me that I don’t need an attorney after I’ve been arrested because I can just ask the District Attorney any legal questions I might have. Gee, thanks for the advice, but I think I’ll go ahead and call my own lawyer anyway, okay?

Here’s where our country stands on the issue of mortgage modifications as of today:

1. President Obama’s Affordability & Stability loan modification and refinancing program is not available today. The Treasury says that contracts are going out to the banks in April, however, so as soon as that contracting process has been completed and the banks get all of the details into their systems, we’ll see what happens.

The government’s current loan modification assistance program, which was funded to the tune of $320 billion last July 30th, has successfully modified ONE mortgage as of April 8, 2009, according to HUD. Yes, you read that right… one. They’ve received 865 applications, and modified one mortgage. Hopefully the program has some money left over, and I’m anxious to hear exactly how much it cost the government to modify that one mortgage, aren’t you?

2. The president’s plan, by his own admission, will not help millions of homeowners at risk of foreclosure. FDIC Chair Sheila Bair shares the president’s view. Speaking to ABC News on February 19, 2009:

“Bair also said that the (program’s) huge expenditure won’t halt an avalanche of foreclosures, conceding that there are millions of homeowners that are now so far ‘underwater’ – their homes now worth less than their mortgages – that they will inevitably lose their homes.”

You see, among other restrictions, the president’s plan only applies to mortgages securitized by Fannie Mae and Freddie Mac, but since 65% of the mortgages originated in 2005 and 2006 were not securitized by either Fannie or Freddie, obviously there will be more than a handful of folks that won’t be able to seek help under the soon to be available government program, which for the moment we’ll assume will work at least somewhat better than its predecessor.

What should these people do? Why call their bank directly, of course. The president feels certain that your bank will be all too willing to help you out by writing off some of the money you rightfully owe them. Why wouldn’t they? They’ve always been so helpful in that regard in the past.

Why would President Obama believe that individual homeowners who can’t make their mortgage payments would be able to call their banks directly to negotiate a modification of their mortgages? Wasn’t he an attorney before his rise to fame, fortune and glory? Well, he asked Treasury about it and Treasury informed him that they had checked with the banks and the banks had assured them that they would be more than willing to help.

I’m sure they would prefer to negotiate with John and Jane Homeowner than an attorney or mortgage expert who is representing the homeowner. In fact, I’m sure they’d much rather negotiate with someone like me than someone who has actually read the documents associated with a mortgage. Me? I just signed where they told me to sign like everyone else.

3. Then there’s the private sector’s Hope Now Alliance, a consortium of lenders (a euphemism for banks) and mortgage servicers (also like banks) that have banded together underr intense pressure from state and federal officials to “help” prevent foreclosures by modifying the mortgages of troubled homeowners.

Hope Now says it modified hundreds of thousands of mortgages in 2008, and is on track to double the number in 2009. The problem is the re-default rate appears to be quite high. Like 50% high. The Hope Now Alliance says it’s having trouble estimating the number of homeowners that it has helped that have re-defaulted six months or a year later. I guess they’re just not good with numbers.

Luckily, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision have been able to keep track of the re-defaults and it doesn’t look good. According to the LA Times on December 26, 2008:

“More than 50% of loans modified this year were delinquent again within six months, according to a joint report Monday from two federal bank regulators, the Comptroller of the Currency, and the Office of Thrift Supervision. There are problems with both industry and government programs. For instance, Hope for Homeowners, run by the Federal Housing Administration, has been criticized as too expensive and onerous to substantially reduce the problem.”

I see. So, there are problems when banks negotiate directly with distressed homeowners over loan modifications, are there? Well, who would have ever thought it? I can’t even imagine why that would be. If you’re confused in the least, please refer to point #1, above.

4. And then there are private sector loan modification companies. These companies have sprung up over the last 18 months to help the growing problem of people finding themselves unable to make their mortgage payment and being unable to refinance. Some are licensed by state regulatory agencies, such as California’s Department of Real Estate, and others are law firms.

I checked out one such company operating under the law firm model and they showed me their internal reports, which showed that they modified almost 400 mortgages in March of 2009 alone. They claim that they will modify 600 mortgages in behalf of troubled homeowners in April. And most interesting to me was their claim that more than 90% of the mortgages they get modified, are paying as agreed one year later.

Of course, as might have been expected, there are companies that entered the previously unregulated loan modification field with the intention of defrauding homeowners. The State of California claims to be investigating 250 of these incidences, and the Washington Post recently reported that the FBI is investigating roughly 1600 cases of alleged fraud by loan modification scammers.

No one would ever defend a company that preys on and defrauds troubled homeowners. Clearly, they should be brought to justice. The rest of the industry, however… the legitimate loan modification firms, should not be unfairly maligned by the President of the United States simply because they charge a fee for their highly valued services. Regulate the industry, don’t throw the baby out with the proverbial bath water.

The government has failed us at every turn in the housing and foreclosures crises. They now claim that their new plan will help 7 million to 9 million homeowners, well… sometimes they say 3 million to 4 million… and sometimes they say 5 million to 7 million. Here’s what ABC News quoted Ms. Bair as saying during her interview of February 19, 2009:

Sheila Bair also told ABC News that Obama’s plan will “at least help 3 million to 4 million of those borrowers in distress”. However, Bruce Marks, CEO of the Neighborhood Assistance Corporation of America dismisses Bair’s claims. Marks told ABCnews.com: “She is absolutely wrong. It will have minimal impact. They have pulled from the sky the 4-5 million mortgages that will be affected. It’s just hype.”

Well, that certainly makes it all very clear… sounds like par for the government’s course, to me. Here’s something for the government’s suggestion box, if such a thing exists. Since there are unquestionably millions of Americans in need of assistance related to modifying their mortgages, and since the government’s last program was a miserable failure and the new one isn’t yet available… how about we don’t go reducing the options available to homeowners in distress quite yet. Private sector firms that charge a fee to help troubled homeowners are just an example of the free market at work. These firms represent the homeowner and negotiate with lenders to get the best outcome possible for that homeowner. That process doesn’t cost the taxpayer a dime. The homeowner pays the expert, and the bank agrees to modify the loan as a result of negotiations with that paid expert. Sounds a lot like a normal business practice to me.

Of course, I’ve only owned my own home and my own business for twenty years now… so what do I know?

What You Need to Know Now About Loan Modifications

2009-04-07T08:05:00.000-07:00

WHAT I NOW KNOW ABOUT THE FORECLOSURE CRISIS AND LOAN MODIFICATIONS
By Mandelman - Last updated: Monday, April 6, 2009 -

Facts I’ve discovered after months of investigation into private loan modification companies, our government’s response to the foreclosure crisis, and banks.

No one is or would ever defend fraudulent loan modification companies. They are pond scum, and should unquestionably go to jail. Sending them to Guantanamo would be fine by me.

That being said, the legitimate loan modification companies are doing a MUCH better job helping homeowners keep their homes by negotiating with lenders in order to modify their payments so they become affordable for the homeowner. You heard that right… A MUCH BETTER JOB.

Their only “crime,” according to Treasury Secretary Tim Geithner and countless others, is that they charge for their services. Mr. Geithner, you are an ass. What you’re doing to help distressed homeowners, as of today, we could put in a thimble.

The government’s responsibility here is to regulate the loan modification industry to protect consumers. You know, punish the bad guys and leave the good guys to do their jobs, help homeowners who are in trouble, and earn a fair profit as a result. If that idea sounds familiar, it’s because that’s how EVERY single other business or industry is handled here in the U.S. of A.

The government, obviously, can’t seem to figure out how to regulate the loan modification industry, so they are abdicating their responsibility by making the blanket statement about loan modification companies: “If you have to pay, walk away.”

Paying isn’t the problem, people… it’s paying and not getting that’s a problem. Paying and getting… not so much.

Just this very morning, Geithner and Attorney General Holder held a press conference in Washington on how the government will NOW start cracking down on fraudulent loan modification companies. It was political grandstanding at its finest.

During the press conference, Geithner said: “These predatory scams callously rob Americans of their savings and potentially their homes. We will shut down fraudulent companies more quickly than before. We will target companies that otherwise would have gone unnoticed under the radar.”

Well, thanks Tim. Should we applaud you for doing your job… finally?

Holder then added his two cents… “If you discriminate against borrowers or prey on vulnerable homeowners with fraudulent mortgage schemes, we will find you, and we will punish you.”

(In case you’re wondering what discrimination has to do with anything we’re talking about here, Holder’s the black guy, and new federal laws dictate that African Americans in government must use the word discrimination in at least 72% of their statements.)

In the AP Business news story, written by Alan Zibel and Christopher Rugaber, that went out on the wire immediately following this morning’s press conference, it also says in reference to loan modification companies: “While some are legitimate, authorities say many are con artists.”

Wow, “some,” and “many”? Gee whiz… you guys and your technical talk. Could you be more vague?

Their article also states: “It’s difficult to gauge if even the legitimate consultants are more effective than nonprofit credit counselors who also work with lenders at no charge.”

Is it “difficult”? Why would that be, I wonder? If that’s “difficult” for our government to gauge, they must be having a dickens of a time fixing the country’s banking institutions. Credit default swaps and complex derivatives must be absolutely giving them fits.

Why don’t they just tell the truth? The reason it’s “difficult to gauge” the relative effectiveness of legitimate loan modification companies as related to the nonprofit credit counselors who offer to work at no charge, is… the non-profit ones haven’t done much if anything as yet. The only other reason it could be difficult to gauge is that absolutely no one in government has tried.

Well, I’ve spent the last several months investigating the private sector’s loan modification companies and I’ve come to very different conclusions than Mr. Geithner, Mr. Holder and those in the media. Of course, I’m not just sitting in an office postulating as to what might be happening out there. I’m driving around in my car with a film crew, interviewing actual homeowners and loan modification company executives, recording their stories and filming while they attempt to call the government help-lines and the banks themselves.

Before I get into the specific results of my investigation, I would think that common sense would dictate that legitimate private loan modification companies would do a much better job of helping troubled homeowners for at least two reasons:

A. They are, for the most part, the only people actually helping consumers get their loans modified. That’s right, there is no government program in place as of today.
B. They are mortgage experts being paid to represent a homeowner’s interests. That’s right, in general people paid to do a job do it better than government workers or volunteers. Go figure.

Here are FIVE FACTS about private loan modification companies and why we need them to survive this government onslaught and media hyped witch-hunt.

1. They are paid to represent the best interests of the homeowner – And no one else is.
To give you a tangible example of why this is important, IndyMac Federal has just announced a new streamlined loan modification program available to homeowners, and they are now refusing to work with private loan modification companies as a result. Here’s what it says, word-for-word, in the first few paragraphs of IndyMac’s Website that describes their new streamlined program available to consumers:

“The goal of this streamlined loan modification program is to achieve improved value for IndyMac Federal. IndyMac Federal will only make modification offers to borrowers where doing so will achieve an improved value for IndyMac Federal.”

Now, I’m not complaining about the language. In fact, that’s probably what it should say. They’re being, in my mind, uncharacteristically forthcoming about what’s going on. They, IndyMac Federal, will be happy to negotiate with consumers directly in a streamlined manner, and consumers are to be on notice that they, IndyMac, will be negotiating in the bank’s best interests… with absolutely no regard for the homeowner’s best interests.

Fair enough, but understanding that’s the situation, I’d prefer to have a knowledgeable expert watching out for my best interests, thank you very much. And I don’t mind one bit having to pay that expert for their time and expertise. Of course, that’s just me. Other people might choose to take a shot with a government help-line. It’s entirely up to them.

Unless, of course, the government succeeds in putting all of the private loan modification companies out of business as a result of their misinformation campaign disguised as protecting the consumer from fraud. If they succeed, I suppose I’ll have to call the government help-line, or face the paid experts at IndyMac Federal on my own. And won’t I be happy about that… just wait until Timmy gets my holiday card next year.

2. As of today, there is no government program available – This shouldn’t be something I have to write much about, and it’s certainly not something about which you have to take my word, or anybody else’s for that matter. How do I know that there’s no government program in place as of today? Because I called the government help-line myself and I also went in to speak with the nice folks at Well Fargo Bank. It takes some time, a couple of hours sitting on hold to be specific, but I encourage others to do the same.

On February 19, 2009, ABC News, in an interview with FDIC Chair Sheila Bair, reported that:

“The initial effects of President Obama’s massive housing rescue plan will be felt as early as next month, one of the administration’s top economic advisors predicted today.”

What’s today? March 19th? No, it’s April 6, 2009. And there is no program in place. Period. Wells Fargo reports that they haven’t even received the contracts from the Treasury Department as of today. I’m sure once they get those contracts, they’ll just sign them without reading them and send them right back to Timmy at Treasury. Because that’s always how things work when there are contracts, banks, and the Treasury Department involved, right?

After the contracting between the nation’s banks and Treasury is completed, then according to FDIC Chair Sheila Bair, speaking on Good Morning America, “it will take some time to screen candidates, verify their incomes, and provide financial counseling to some applicants.”

I’m quite certain that it will, as Ms. Bair said, take some time. I sure hope my bank will wait before foreclosing on my home. I’m sure they will. After all, they were so nice when I took out my mortgage.

3. The President’s housing rescue plan doesn’t help everyone who needs help – By Sheila Bair’s own admission, and President Obama’s too I might add, the Affordability and Stability Program will not help millions of homeowners at risk of losing their homes to foreclosure. According to Ms. Bair, again as quoted from her February 19, 2009 interview with ABC News:

“Bair also said that the (program’s) huge expenditure won’t halt an avalanche of foreclosures, conceding that there are millions of homeowners that are now so far ‘underwater’ – their homes now worth less than their mortgages – that they will inevitably lose their homes.”

Inevitably? Did Ms. Bair just say inevitably? Now there’s optimism for you. I guess she’s counting on the government putting the legitimate loan modification companies out of business PDQ… pretty darn quick, as my mother used to say.

Okay… you heard her folks. According to FDIC Chair Sheila Bair, if you’re in trouble with your underwater mortgage, it’s inevitable that you’re going to lose your home to foreclosure. Better start packing. No reason to try a legitimate loan modification company who might be able to help. It’s inevitable, according to Ms. Bair, and she must know. She’s chairperson of the FDIC, after all. If she doesn’t know, who would? I mean, the FDIC saw this whole thing coming a mile away, and that’s why they stepped in to stop our entire economy from going down the drain, right? Whew… we sure dodged a bullet there… thanks Sheila!

Sheila Bair also told ABC News that Obama’s plan will “at least help 3 million to 4 million of those borrowers in distress”. Bruce Marks, CEO of the Neighborhood Assistance Corporation of America, however, dismisses Bair’s claims. Marks told ABCnews.com:

“She is absolutely wrong. It will have minimal impact. They have pulled from the sky the 4-5 million mortgages that will be affected. It’s just hype.”

4. The President’s Affordability & Stability Program only modifies loans for five years – That’s right. President Obama’s plan, assuming you qualify for a modification, only modifies your adjustable rate loan into another adjustable rate loan, one that adjusts to the prevailing rates five years from now. If rates are high five years from now, well… I guess we’ll just see what happens then.

The fact is that legitimate private loan modification firms are achieving significantly better results for homeowners. Routinely, these private sector firms get modifications that change adjustable rate loans into 30-year fixed rate mortgages. It’s not uncommon to see reductions in the principal amount owed by the homeowner.

In one specific case I witnessed recently, the loan modification firm got the bank to agree to reduce a $4,000 a month payment on adjusting loan, to $800 a month for three years, and after that, the payment tops out at $1900 a month. I would have to believe that the President’s plan, or a consumer calling their bank directly is highly unlikely to achieve that result.

5. What President Obama said about private loan modification companies IS WRONG – President Obama has said “if you have to pay, walk away” from loan modification companies. He was wrong to say that, and what he said is harming troubled homeowners in an attempt to protect others from scams. He needs to know what he’s done. His words will cause some homeowners to lose their homes unnecessarily. And I do not believe that was his intent.

I have personally visited with several loan modification companies over the last month. I have interviewed their CEOs, visited with their customers, attended audits being conducted by government regulatory agencies, and spoken with bankers, none of whom would agree to be mentioned by name. All of the companies I’ve interviewed and visited are unquestionably helping troubled homeowners and none could be considered in any way “scams”. In fact, in my view, they are all critical components in any solution to the foreclosure crisis.

One such company, Green Credit Law Center, was one of the early entrants into the loan modification business, modified more than 300 mortgages for troubled homeowners in March 2009, and they expect to modify 600 mortgages on behalf of consumers in April. And that’s a fact. Of course, they did charge a fee for their work, but since all of their customers that I spoke with personally didn’t mind paying that fee in the least, I might add, I’m thinking it should be okay.

The government needs to regulate the loan modification industry in order to protect consumers from fraudulent operators, not wipe out the good with the bad. It occurs to me that there have been quite a few fraudulent investment scams out there over the years… but I don’t remember my president ever telling me not to pay Charles Schwab or Merrill Lynch their fees.

With the camera running, I asked a loan modification expert at a law firm to contact a bank to check on a loan modification. He called one, and I won’t say which one, today anyway. The woman at the bank told him that he would have to get the borrower on the phone before she could talk about the loan modification in progress. He did. When all three were finally on the call, the first thing the woman from the bank said was: “You know… you don’t have to pay him. You can just call us directly.”

I have to say that I have rarely been so shocked at anything in my life. And this woman was not a senior level bank executive, she was someone answering questions about loan modifications in progress. That means that what she said was the result of an institutionalized training program, she didn’t come up with that line herself. She was told to say it.

“You don’t have to pay him”? How dare you say such a thing? You’re just saying that because you’d rather have a less experienced person with which to negotiate. You are not the person that should be giving advice to that borrower.

The banks should be on notice… I’m calling you… every day… more than once… and I’m filming it, and recording it. I’m coming after you with everything I’ve got.

In conclusion…
President Obama was obviously told that consumers don’t need to use a private loan modification company. He said that homeowners could either call a government program or if they didn’t qualify for that program, they could contact their bank directly. Both statements, while true, are also wholly beside the point.

Who would tell the President something like that? The banks, that’s who… who else?

After spending months investigating the loan modification industry, I’ve come to understand that the banks do not want private loan modification companies helping consumers obtain loan modifications. Why? Because they’d much prefer to deal with homeowners who are not experts in mortgage terms, are distressed as a result of being at risk of losing their homes, and as a result are much easier to take advantage of, simple as that.

Is that an indictment of the entire banking industry? Yes, let me be very clear… IT IS.

Banks are debt collectors. That’s what they do. When a homeowner in distress calls a bank directly to ask about modifying the terms of their mortgage, they are asking the bank to write off some of the money the consumer rightfully owes that bank. Does anyone imagine that the banks will be terribly helpful in that situation? If you do, then you’ve never been late on your car payment or mortgage payment… because in those situations the bank is not your friend. Never have been, and never will be. They want their money, and as much of it as soon as possible is their clear goal.

It has become obvious that both state and federal agencies have no idea what they’re doing when it comes to solving the foreclosure crisis. I’m not blaming them for not knowing, this crisis has emerged, deepened, and changed quickly. But to put legitimate loan modification companies out of business, something they are very close to accomplishing, will only make things worse for millions of Americans.

Consider this… President Obama says having to pay makes a loan modification company a scam. Illinois Attorney General Lisa Madigan to told reporters at today’s press conference in Washington to “Stay away from anyone who says they will save your home in return for money up front.”

And at the same time, California’s Department of Real Estate (”DRE”) has published an “Advance Fee Agreement,” and tells consumers to make sure that the company they hire to help them with their loan modification use that agreement, which was approved by the DRE. Unless the company is a law firm, in which case it’s okay to pay a fee in advance and the advance fee agreement doesn’t apply.

Well, that all seems pretty clear, doesn’t it? The President says don’t pay. The State of California says pay, but only if a certain form is used… unless it’s a lawyer… or a Tuesday… and your license plate ends in an odd number… Oh my God.

Homeowners need to watch out for these things, as far as I’m concerned:
Scams – Check out the loan modification company before you pay them a nickel. Ask for references, check the Internet for complaints, ask for references, visit their offices. And if you don’t feel good about the firm, don’t hire them. Look around, there are others out there… today, anyway.

The President, along with state and federal agencies – Our government has failed us at every turn in this crisis. They clearly don’t know what they’re talking about when it comes to saving people from losing their homes, as evidenced by the fact that millions of Americans have already lost their homes to foreclosure and all forecasts point to millions more losing their homes over the next two years. Save yourself. Your government doesn’t even understand the problem. Your government hasn’t even gone to the trouble of talking with anyone who’s actually modified a mortgage.

The administration has recently been funding numerous non-profits to assist troubled homeowners. ACORN, for example, just received $5.2 million from the Neighborhood Stabilization funds to provide some sort of foreclosure counseling. The President’s plan also offers to pay banks $4500 over five years for the loans they agree to modify, assuming borrowers make their payments, of course. I hope it works.

However, I think it’s worth mentioning that when President Obama says that a loan modification shouldn’t cost you anything, he means “you,” not “us”. When a homeowner pays a legitimate loan modification company three grand to get their mortgage modified, it costs us quite a bit less… nothing, not to put too fine a point on it. And the bank that modifies the loan does so because they decided to do so. Not because the government is paying them to help fix the problem they helped to create.
And I know it works, because I’ve seen it with my own two eyes… hundreds of times now.

The Banks – Your bank is out for itself. They are not being honest when they tell the President that consumers can simply call them directly. It would be like the police telling you that you don’t need a lawyer. Whatever your bank tells you… check it out for yourself. Do not believe them at face value. The banks have proven themselves to be less than honest, and capable of anything. Beware the banker that says “trust me, we’re a bank.”

I received an email from newyorkforeclosurelaw.com this afternoon. It read:
If there is any lesson to be learned out there in the new wild west of loan modifications, it’s that homeowners should hire an experienced lawyer.

I just interviewed someone who was a vice president level executive at several of the banks that we’ve all heard about. He was let go from his last vice presidency because he asked too many questions about what was going on. I believe what he’s told me. And none of it is good. I asked him about the ratings agencies that slapped triple A ratings on the mortgage backed securities and he said that everyone knew that the models weren’t taking the right risks into account. But no one raised the issue too loudly. No one stopped what was happening. And bonuses went higher and higher.

He was at one of those banks when the FDIC started forcing them to modify mortgages. He said it was an incredible mess, that there were no standards. No one knew what they were doing. Nothing was consistent. He said that a friend who’s still at that bank says that things are going better today. That the bank has put a lot of effort and resources into their loan modification department. He agreed with what I said in this article about the banks being out for themselves and not for the homeowner. Frankly, his statements came as no surprise to me.

Then he said something I won’t soon forget: “If they had put this much effort into loan modifications in the first place, we wouldn’t have had this problem to begin with.”

And I hung up the phone and started to cry.

A Letter to Senator Diane Feinstein

2009-04-03T17:27:00.000-07:00

By Mandelman - Last updated: Friday, April 3, 2009 -

What follows is the text of a letter I sent to Senator Feinstein today. The situation is grave and worsening as related to private sector loan modification companies. Soon they will all be gone if something isn’t done by those in government, and once that’s the case, homeowners will have nowhere to turn for help. I know… they can call the government hotline, but I’m tired of being nice about this… after 47 years on this planet, I can’t believe anyone believes the government program will work, much less help. And anyone who tells me that homeowners can simply call their bank and get their loan modified is simply delusional.

Please help me preserve the only chance we have at a solution to the foreclosure crisis that doesn’t cost the taxpayers countless billions… the only solution that makes the banks fix the problem they played a large part in creating. We don’t need bailouts. We just need loan modifications. And the legitimate companies that are helping consumers remain in their homes and avoid foreclosure are the last companies we need to put out of business.

Use any or all of the text that follows and send as many letters and Emails as you can. Send them to your state senators, congressional representatives, and Departments of Real Estate. But please, do it today… or tomorrow might be too late.

Dear Senator or Congressional Representative:

Lately, I have been paying close attention on the government’s position on the emerging loan modification industry. I am writing to you today because it has become abundantly clear to me that the government, I assume unknowingly, is making the situation measurably worse for distressed homeowners.

Several weeks ago, I was shocked to hear President Obama, while talking about mortgage loan modifications made the statement “If you have to pay, walk away.”

While I couldn’t agree more that fraudulent operators who deceive homeowners should and must be stopped, there are many legitimate loan modification companies in California and across the country; companies who are each successfully modifying hundreds of mortgages a month and thus making it possible for people to keep their homes. Their work benefits not only the homeowners themselves, but also our society as a whole.

The fact is, to-date these companies are the only organizations who can claim success in this area. The government programs, such as the Hope for Homeowners program initiated by President Bush, have failed. The banks have most definitely failed homeowners and our nation at every turn. Only the legitimate, private sector loan modification companies have a track record of success.

So they charge a fee? Of course they do. Charging for services is not a bad thing. Charging and not delivering is a problem. The President’s characterization of loan modification companies as being bad because they charge a fee is not only unfair, it’s causing irreparable damage to the only industry that’s helping to stem the tide of foreclosures in this country.

You need to know that very soon, it will be too late. All of the legitimate and reputable loan modification companies will be gone and homeowners will be left with only two options: Qualifying for President Obama’s loan modification program. Or attempting to negotiate with their bank directly. Neither is a good option for millions of homeowners, especially in hard hit states like California.

The President’s plan requires a homeowner to be no more than 5% underwater on their mortgage. So, if your balance is $200,000 and you owe $210,000… you might qualify. But if you owe more than $210,000 in that scenario, you’re out of the running. It’s obvious that for the most part, people only 5% underwater are not the ones at risk of foreclosure, and with the declines in property values approaching 30% and 40% in some areas, the President’s plan won’t help millions at risk of losing their homes.

Additionally, the President’s plan only applies to mortgages securitized by Fannie Mae and Freddie Mac, but the data shows that in 2005 & 2006, a full 65% of mortgages were not securitized by Fannie or Freddie. And these are the loans most at risk of foreclosure.

You should also know that I’ve done a great deal of research into the potential for homeowners to negotiate directly with their lenders and I have to tell you that as answers go… this has already proven itself to be a particularly ineffective path. Among other things, just imagine a distressed homeowner calling a bank in an attempt to negotiate with a major financial institution and the picture will begin to emerge. (I’ve recently written several articles that provide a more in-depth look at this issue, and will provide links to those articles at the bottom of this letter.)

The overriding point is that, as a result of the media’s attention to the fraudulent loan modification scams, and compounded by the President’s statement and very clear messaging found on the Treasury’s Website, legitimate loan modification companies will soon be gone, and there is nothing in place to replace the valuable work they do on behalf of homeowners to reduce the number of foreclosures.

The California Department of Real Estate has weighed in with what they refer to as an “advance fee agreement,” which states that a loan modification company cannot charge more than 30% of its fee up front, which might not be too bad, except that it also says that once the consumer’s mortgage has been modified, the balance is only payable by the consumer if the consumer is “satisfied,” and there is no objective definition of that satisfaction. This effectively puts all legitimate loan modification companies operating under DRE rules out of business, as no reasonable company could operate under such conditions.

Today’s homeowners are becoming increasingly problematic. There is a growing attitude of entitlement that is resulting from the media’s reporting of bank improprieties, AIG bonuses, and the like. Just this morning, one CEO of a highly effective loan modification company in Irvine, CA, was reported to have said that just today, two homeowners that received significant modifications as a result of his firm’s services turned them down because they said they weren’t good enough. One was offered a reduction to a 0% interest rate and the other to a 3% rate.

Having watched this crisis for the last two years, it has become painfully obvious to me, that both the state and federal government have no idea how to handle the foreclosure crisis in this country. Neither appears to understand how to differentiate between a fraudulent loan modification company and a reputable one, and therefore have chosen to brand them all with the same brush… “If you have to pay, walk away.”

I implore you to look at this issue more carefully. The number of foreclosures is rising each month and until something is done to slow this progression, our economic recession will only deepen, people will become more disillusioned and angry, and political support to do the things needed to right our economy, already scarce, will become nonexistent.

Last week the CEO of a property preservation company headquartered in Tustin, CA was interviewed by a columnist on ML-Implode.com. His company reconditions foreclosed homes on behalf of banks so they can be put back on the market. He said that increasingly, homeowners are damaging or destroying their homes before they leave them. A 61 year-old man in upstate New York recently rented a bulldozer and reduced his foreclosed home to rubble just two days before a forced sale was to take place. The level of homeowner unrest is rising fast and I fear will soon deteriorate until it becomes unmanageable.

It seems unquestionable that we need to develop real world solutions to the foreclosure crisis, solutions that protect homeowners, while providing them with the choice of hiring a professional and reputable loan modification company to work with their bank to prevent foreclosure of their home.

Calling the government does not even approach being a total solution, let alone the fact that no government program is even in place today. And calling one’s bank directly is an absurd proposition, as even Rep. Waters found out on ABC’s Nightline over a month ago when she tried it herself and found it more than difficult. I’ve interviewed dozens of homeowners that have reported trying to work with their bank for months at a time to no avail.

“If you have to pay, walk away,” was clearly not a well thought out statement for President Obama to have made. The fact that some loan modification companies have proven themselves to be scams is reason to regulate the industry to prevent scams from operating. It is not justification to put the entire industry out of business, especially when there is nothing to take its place.

Loan modifications don’t spend taxpayer dollars. How can we be eliminating the porential for this type of solution, as we watch untold billions get pumped into banks and numerous others?
Consider that there have been countless securities scams over the years, Bernie Maddof’s certainly comes to mind, but I don’t remember hearing a president tell the American public “If you have to pay, walk away,” about licensed securities dealers as a whole. No one tries to put the securities industry out of business because some operators are shown to be scams.

The people being harmed, both the distressed homeowners and the reputable loan modification companies that are helping people remain in their homes have no lobby. No one represents them, and they are the ones being harmed and the ones helping.

The government’s response to the foreclosure crisis is fast becoming a real travesty, and one for which we will all pay the price for years to come.

Please feel free to contact me at anytime… I would like to send you footage of interviews I’ve conducted with California homeowners and loan modification company executives.

Mortgage Market Commentary 4/3/09

2009-04-03T08:06:00.000-07:00

Mortgage backed securities (MBS) prices are lower (rates higher) after release of March Employment figures as traders refocus on the record amount of government debt needed to be sold to end the recession; FNMA 4.0$ coupon 100.19bps, -11bps. The economy lost 663K workers in March bringing the total losses since December 2007 to near 5.1 million. The Unemployment rate climbed to 8.5%, the highest level in 25 years, threatening to keep spending subdued for months and delay any recovery. The job cuts have been spreading from manufactures to service providers and employers are also cutting back on hours. Average work week shrank to a record 33.2 hours in March. ISM non-Mfg index fell to 40.8, more than expected, pointing to a deepening contraction. New orders, employment and prices paid components all fell indicating slowing business conditions ahead. On a positive note, no primary dealers submited bids to tap the Fed's Term Securities Lending Facility (TSLF)to help firms meet short-term funding needs indicating more optimism regarding ways to finance holdings of less liquid assets like MBS. TGIF!

Foreclosure Crisis: Private Sector vs. Gov't Cheese

2009-03-31T14:21:00.000-07:00

By Mandelman - Last updated: Monday, March 30, 2009

Our nation is facing a home foreclosure crisis. Four million Americans have already lost homes to foreclosure, and forecasts show another 3.6 million foreclosures through 2010. Who knows what will happen beyond that, the numbers could go even higher. Housing prices are in many parts of the country are in free fall, and no bottom is in sight. Some are saying prices will fall by an additional 20-30% before we see the market’s bottom, but no one really knows how bad it will get, or how long it will last.

Our banking system is on anything but solid ground. Our credit markets are seriously impaired, to say the very least. Unemployment is steadily rising. The deficit will near two trillion dollars this year. Our national debt is astronomical and increasing. We are spending taxpayer dollars hundreds of billions at a whack.

Everyone agrees that until we manage to stem the number of foreclosures and stabilize the housing market, economic recovery is not possible. President Obama announced a plan to rescue homeowners at risk of foreclosure at a cost of $300 billion. The plan, however, is limited in scope. It will only help those who qualify, and among other things, that means only those with loans securitized by Fannie Mae and Freddie Mac, and only those with homes no more than 5% underwater. That means if your balance is $200,000… you can’t owe more than $210,000… or you’re out.

The Foreclosure Crisis Will Not Stop By Itself

We need to find solutions and there are only two avenues from which to choose: government program or private sector solution. We all know what the government programs are like. They cost the taxpayers untold billions. And they work like… well… like government programs. Well… isn’t that right?

President Obama’s plan, for which banks are scheduled to receive contracts in April, will help some, but not nearly enough. The problem is simply too big for any single solution to have a shot. There is another option. Loan modification companies could be regulated and contracted to help homeowners modify loans. There are loan modification companies all over the country that are modifying hundreds of loans every month. They’re in place, know the banks, and they work cheap, relative to any other alternative. What’s not to love?

Yet, incredibly, our government is now campaigning against private sector loan modification companies, saying that some of them have scammed homeowners by charging a fee and delivering nothing in return. President Obama, when talking about homeowners and loan modifications, has said quite publicly: “If you have to pay, walk away.”

Clearly, the problem is NOT having to “pay for a service,” the problem is paying and not receiving the service for which you’ve paid. Of course there’s a fee for having a company negotiate with your bank for a modification of your mortgage. Obama knows this. His housing rescue program, you might recall, offers to PAY banks about $4,500 over five years for modifying mortgages that qualify for his program. And I’m quite certain that the costs of implementing his plan are a long way from $0.

Already, the legitimate loan modification companies are seeing their business cut in half, as a result of the government’s campaign against a private sector solution to the foreclosure crisis. Soon many, of not all, will close their doors. More people will unnecessarily lose their homes to foreclosure. And it will be the American taxpayers that will continue to pay the bill.

Please tell your congressional representative… Tell those in the media… Take an OBJECTIVE view of loan modification companies… Because the rest is just GOVERNMENT CHEESE

Mortgage Market Commentary 3/31/09

2009-03-31T07:52:00.001-07:00

Mortgage backed securities (MBS) prices are near unchanged (rates flat) as the prospect of increasing debt sales damp demand for fixed income assets; FNMA 4.5% coupon 102.17bps, +3bps & 4.0% coupon 100.75bps, +3bps. We will be switching the current coupon from 4.5% to 4.0% to better reflect current market conditions. To stem the longest recession since 1930, the U.S. government has spent, lent or guaranteed $12.8 TRILLION, an amount the approaches the value of everything produced in the country or $42,105 for every man, woman and child in the U.S. Case/Shiller Home Price Index tumbled 19% in January from a year earlier, the fastest drop on record as demand plummeted and foreclosures rose. A glut of unsold properties may keep prices low, shrinking household wealth and damping spending. Lower prices and borrowing costs however are attracting some buyers, evidenced by the National Association of Realtors affordability index at record levels. Chicago PMI fell to 31.4, below the consensus forecast, as did Consumer Confidence, which came in at 26. Most economic data in March exceeded expectations, so these reports bucked the trend and quells talk of the economy bottoming out anytime in the near future.

Mortgage Market Commentary

2009-03-30T07:24:00.000-07:00

The week ahead shapes up as an exciting one for mortgage backed securities (MBS) culminating with the important March Employment report released on Friday. As usual, this data on the number of jobs, the Unemployment Rate, and wage inflation will be the most highly anticipated economic data of the month. Monday starts off pretty tame, no economic reports due but short term T-bill auctions and a couple of Fed speakers will garner attention. Case-Shiller Home Price Index, Chicago Purchasing Manager Index (PMI) and Consumer Confidence will provide a broad view of the economy on Tuesday. Wednesday brings a slew of information including Mortgage Bankers Association weekly application data, Challenger & ADP Employment figures, ISM Manufacturing Index, Construction Spending and Pending Home Sales, a leading indicator for the housing market. Thursday's most pertinent data are Jobless Claims and Factory Orders. Besides the all important Employment Report on Friday, we also get ISM Services Index plus Fed Chief Bernanke speaking which usually causes a stir. Combine all that with legislative drama, Administation initiatives and global equity concerns PLUS the penultimate trading week before April Conforming MBS "rollover" and this will be an exciting week in the mortgage world!

FED Surprise Lowers Mortgage Rates

2009-03-20T11:11:00.000-07:00

Thanks to a Fed announcement (see below) which exceeded all expectations, it was a big week for mortgage markets. Mortgage rates ended the week down significantly, falling near the lows reached in January. The stock market and Treasury market also performed well during the week.

Following Wednesday's meeting, the Fed shocked investors with an aggressive expansion of its mortgage-backed securities (MBS) purchase program. In addition to the previously announced $500 billion in MBS purchases which began in January, the Fed will buy an additional $750 billion this year, bringing the total to $1.25 trillion. To put this in perspective, $1.25 trillion represents more than half of the estimated total mortgage issuance in 2009. Similar to its November announcement about the initial $500 billion MBS purchase program, the Fed achieved its desired reaction with an immediate decline in MBS yields. Since mortgage rates are largely based on MBS yields, mortgage rates moved lower as well.

The Fed has identified the stabilization of the financial system and the housing market as key elements of an economic recovery, and lower interest rates will help achieve these goals. Inflation data released during the week contained no reason for inflation to be a concern in the short-term. With yet another increase in government spending, though, investors will be keeping an eye out for signs of higher future inflation.

New Fed Money to Lower Rates

2009-03-18T22:10:00.000-07:00

Greatly Expanded Purchases Are Designed to Lower Interest Rates, Stimulate borrowingTOOLBOX

The decision by the Fed to buy government bonds and mortgage-related securities is designed to lower borrowing costs for home mortgages and other types of loans, thereby stimulating economic activity. The central bank, effectively, will print more money to pay for the purchases.Combined with the billions already deployed by the Fed, the new money dwarfs even the biggest government bailouts of financial companies.

Yesterday's announcement amounts to a recognition by Fed leaders that the economy has gotten much worse than they had forecast at their last policymaking meeting, in January. It also is their attempt to show market participants that, three months after cutting short-term interest rates to zero, they still have more tools to try to bolster the economy.Financial markets surged on news of the decision, with the Standard & Poor's 500-stock index up 2.1 percent for the day.

The new purchases come with risks. They will balloon the value of the assets the Fed holds by about 50 percent, to more than $3 trillion. That could make it tricky for the central bank to draw that money out of the system once the economy starts to recover. The Fed would probably find it difficult to sell such massive volumes of assets, and if it doesn't handle the task adeptly, the nation could face high inflation because too much money would be in circulation."This will help the economy," said John Silvia, chief economist at Wachovia. "The challenge comes nine months from now, when the economy starts to recover and the Fed finds itself in a very delicate position.

The challenge is the exit strategy.

"The newest intervention includes a plan for the Fed to buy up to $300 billion of long-term U.S. Treasury bonds over the next six months. Increased demand for bonds drove down the government's cost of borrowing money almost instantly yesterday, with the rate on 10-year Treasurys plummeting by half a percentage point. The dollar fell sharply against other major currencies, highlighting the risk that an increased money supply could cause the currency to lose value over time.

Some Fed leaders have resisted buying Treasurys in the past because they were unsure whether it would help reduce borrowing costs and because they feared that it would appear that the central bank was simply printing money to finance the government's deficit, a hallmark of countries with poorly managed economies.

Ultimately, in the two-day policymaking meeting that ended yesterday, the scope of the economy's deterioration in recent months trumped those concerns. It helped that the Bank of England took similar steps earlier this month, with positive results. The action is an example of "quantitative easing," in which the money supply is increased, a policy famously undertaken by Japan in the 1990s. In contrast, the Fed has largely tried to stimulate the economy with what Chairman Ben S. Bernanke has called "credit easing," a policy in which cash is used to prop up lending.In its statement yesterday, the Fed said it will increase its purchases of mortgage-backed securities by $750 billion, on top of $500 billion previously announced, and double, to $200 billion, its purchases of debt in housing-finance firms such as Fannie Mae and Freddie Mac.

The earlier purchases pushed rates on a 30-year, fixed-rate mortgage down by about one percentage point, and analysts said that yesterday's announcement could reduce mortgage rates by another half of a percentage point.At the current pace of home-purchase and refinancing activity, the central bank could end up funding 60 to 70 percent of mortgages issued this year, Wachovia economists estimated. "You'll get some mortgage refinancing, maybe some people on the bubble of foreclosure who are spared," said Richard Yamarone, chief economist at Argus Research.

The steps are the latest in the Fed's attempt to stimulate the economy through unconventional means, many of which include massive expansions of the central bank's balance sheet. At the beginning of September, before the financial crisis deepened, the Fed had $894 billion in assets.

That figure had risen to $1.9 trillion last week, and will rise above $3 trillion if the central bank makes the purchases announced yesterday without cutting back in any other areas of its intervention in the economy. The Fed is also preparing other measures to expand lending, most notably a $200 billion consumer lending program. The initial deadline for investors to participate in that program is today.In the past three months, the Fed's balance sheet has actually contracted, as conditions in private credit markets have improved enough that fewer companies have taken advantage of Fed programs to supply cash. While it was considered good news that private lending was showing signs of life, it was bad news in the sense that the Fed believes its massive balance sheet is the key tool to support the U.S. economy more broadly.

That expansion of the balance sheet could pose some difficult dilemmas down the road. Some of the new programs the Fed has launched will unwind automatically -- and fairly quickly -- as the financial system stabilizes.

But it will be harder to deal with long-term securities like those the Fed is now buying. Having them on the bank's books could make it harder to reverse course and shrink the money supply when the economy starts to strengthen, which could cause inflation.

That said, "that's a good problem to have," said Neal Soss, chief economist at Credit Suisse, in that it means the economy would have returned to growth. "When the house is burning down, you put out the fire. If in the process you get the furniture wet, you worry about that later."

New Federal Modification Program

2009-03-12T11:41:00.000-07:00

Click on the Title above and check out the requirements for the New Federal Loan Modification Program!! You are welcome to try it yourself but understand that there are key elements you need to present to your lender in the correct way or you're screwed. You are allowed one shot at this and if you are not totally confident in your ability to understand and present all of the items listed in the article linked above, you better get a professional who is to help you approach your lender.

These programs and the idea that the lender or the government will help you makes for good sound bites and political capital but when it gets down to the nitty gritty of getting into a program or expecting your lender to give you the best deal, think again!

Knock, knock. I'm from the government and I'm here to help you!!

There is much more to negotiating with your lender than filling out paperwork and sending it in. You need to know how to evaluate what you are sending your lender. What debt-to-income ratios, both front end and back end, does your financial information yield? Do you understand how to calculate them? What is your loan-to-value? How do these fit into the federal guidelines. Do you understand what the NPV (Net Present Value) your current loan represents or what a proposed modification will represent? What is the NPV of your loan if it forecloses.

The above examples are but a few of the terms you need to understand and how they apply to your loan. In addition to all of the financial aspects of a negotiation is the pure time involved. Do you have the time available to process your modification? Let me rephrase that, can you afford to make this a full-time job for at least a month? That is what it takes to negotiate with a lender. If all you do is send in lender forms you are putting the entire process in the hands of your lender and letting them tell you what they will do for you.

Understand, lenders are not doing modifications to help you! Their perspective is to make as much money as possible or loose the least amount possible period! They don't care about you personally. If they can get you to agree on a plan that will benefit them, they will. They got you into the loan you're in now! You need to know what you are doing in order to get the best plan for you, not for them. If you are confident in your abilities, thoroughly understand the financial content, are confident in your negotiation skills and you can afford another full-time job, go for it! If you are not it will show! Call me now!! 800-724-2789

President Obama's Plan - What No One Is Telling You

2009-02-26T07:30:00.000-08:00

President Obama’s Plan - What No One Is Telling You

Thu, Feb 26, 2009

This is a continuation of a post I wrote a couple days ago about President Obama’s Homeowner Affordability and Stability Plan.

There are some major questions about the President’s new plan but the media isn’t talking about them. So I’ll put them here and ask you to pass them around through Twitter, Face Book, e-mail…whatever it takes to get the word out because homeowners need to know.

It Won’t Help Huge Groups of People

The refinancing plan won’t help the people in the most heavily affected states like California, Arizona, Florida, and others. It is focused on those who have first mortgages that are no more than 105% of their current market value. The administration’s own example shows how unrealistic this is for homeowners in states heavily affected by the market freefall.

Consider a family that took out a 30 year fixed rate mortgage of $207,000 with an interest rate of 6.5% on a house worth $260,000 at the time. Today, that family has about $200,000 remaining on their mortgage, but the value of their home has fallen to $221,000 - making them ineligible for today’s low interest rates that now generally require the borrower to have 20% home equity. Under this refinancing plan, that family could refinance to a rate near 5.16% - reducing their annual payments by over $2,300.

Obviously, this refinancing plan won’t help someone that was 100% financed or someone who put 20% down but has watched as their market value plummeted 50%!

If you’re in this position, the second part of the President’s plan may help you, though…it’s meant to modify loans rather than refinance. But unlike previous mass loan mod efforts, you don’t have to be behind on your payments t use this one.

So maybe the 105% limit isn’t so big of a deal? You just have to go for a loan mod rather than a refinance. Or is it that easy?

It Covers First Mortgages Only

Both of the President’s plans only cover your first mortgage. Before you can successfully enter either program if you have a second mortgage (as most people that are 100% financed do), you’ll have to get that second mortgage to agree to stay in a second position on your lien.
Normally, if you modify the first, the second would become the first lien holder because it’s the older note. They have to agree to staying in second or you’re hosed.

How easily this can be done waits to be seen. But either way, the second mortgage is not paid off in either plan so you’ll still be making that payment on top of your new, modified payment.

No one told you that, did they?

It Only Covers Up to Fannie & Freddie’s Max Loan

While this won’t affect a lot of people, it does affect many people in the most heavily hit areas of the country. It affects the people that live in areas that ’enjoyed’ skyrocketing home values. Places like Sacramento, Modesto, Las Vegas, Fort Lauderdale, and Phoenix.
The limit for Fannie Mae and Freddie Mac is $417,000 right now. So if your home is currently worth more than that now, you’re out of luck under this plan.

Other Gotchas

1. If you have a back end ratio of 55% or over, you’ll have to agree to enter HUD certified consumer debt counseling.

2. Your lender might not participate. These plans will only be offered on loans held by Fannie Mae and Freddie Mac initially. Any servicers could be servicing the loans, however, so call your servicer after March 4 to see if you qualify.

Once the program rolls out, any bank that accepts money from the Treasury Department’s Financial Stability Plan will be required to participate.

3. Your modified interest rate cannot go below 2%. If your payment can’t be brought below a 31% debt to income ratio at a 2% interest rate, you won’t qualify unless your bank also forgives principle.

4. If the total expected cost of a mod (including the government payments to the lender) is expected to be higher than the cost of putting you through foreclosure, you won’t qualify and your lender will foreclose.

5. The Bankruptcy Cramdown (if it gets approved…it’s separate from this bill) works like this:
If you enter bankruptcy and the judge agrees to modify your loan, the amount you owe in excess of the current value of your home will be treated as unsecured debt and be allowed to be discharged. But you must first work through every option with your lender before the judge can consider it.

Many of these facts came directly from the Homeowner Affordability and Stability Plan Fact Sheet. I’d highly recommend reading through the entire thing yourself.

As you can see, this plan is not the savior it’s cracked up to be. It will certainly help MANY homeowners tat would otherwise end up evicted from their homes. But there are still many gotchas you need to watch out for.

For example, even with this plan, you absolutely must read everything your lender or servicer sends you thoroughly to make sure you’re not being taken advantage of. They will try to make this as profitable for them as possible even though it seems they are losing money.

Pay particular attention to whether they try to take your rights to include the mortgage in a bankruptcy case and to sue for predatory lending, RESPA, or Truth in Lending Violations away. This has been a common tactic in streamline mods. For more info, please listen to the call Brent Lane and I did on streamline refinancing for underwater mortgages.

Look for part 3 of this article: What you should do while you’re waiting for March 4th…you’ll be notified by e-mail if you’re on our list. If you’re not on our list, you’re welcome to sign up below.

President Obama's Plan - the Basics

2009-02-26T07:29:00.000-08:00

President Obama’s Foreclosure Plan - The Basics

Tue, Feb 24, 2009

You’ve probably heard a lot about President Obama’s Homeowner Affordability and Stability Plan. He unveiled it last Wednesday in Phoenix and there was a firestorm of coverage about it.
It’s an intensive and comprehensive plan. He plans to put $75 Billion into programs to help homeowners in foreclosure and those that are approaching foreclosure.

Help If You’re Haven’t Missed Any Payments

One of the chief complaints I hear every day is, “why is there no help for people that haven’t fallen behind on their payments?” It’s an understandable question and one that - up until now - has largely went unanswered. Which is crazy considering families that enter loan modifications before they miss any payments are much more likely to complete their workout agreement than those that are behind. Here’s the outline of what’s available if you’re not behind on your payments.

If you have a loan owned by Freddie Mac or Fannie Mae, you may be able to refinance your home if doing so will not exceed 105% of the current market value of your home. You must have sufficient income to support the new mortgage payment and an ‘acceptable’ payment history.
If you have a first and a second mortgage, you can take advantage of the program as long as your first mortgage is less than 105% of the current market value of your property. But this will be dependent on the lender that holds your second agreeing to remain subordinate to the new first mortgage. This means that you will still owe the full amount of your second mortgage.
Refinancing will not, necessarily, lower your payment. If you have an interest only loan or one with an extremely low interest rate that’s about to expire, your payment will almost definitely go up. This is because you’ll be refinanced into a fully amortizing 15 or 30 year mortgage.
Help If You’ve Missed Payments or Are In/Nearing Foreclosure

You do not have to have missed mortgage payments to take advantage of this program…but that’s who it’s primarily aimed at. This program is focused on modifying mortgage loans rather than refinancing them.

You still must have enough income to make the payments of course, so if the economic impact of your hardship isn’t resolved, you’re still out of luck. In addition to income there are other requirements:

1. You must occupy the home as your primary residence
2. You current mortgage payment must be more than 31% of your monthly gross income.
3. Your loan must amount must be below Fannie Mae and Freddie Mac’s lending limits ($417,000).

This program (like the refinancing) is only concerned with your first mortgage, so the holder of your second mortgage is going to have to cooperate and play nice.

Bonus: For every month you pay on time after you start this program, the government will pay additional principle payments toward you mortgage. The payments ($1,000) will be applied to your principle balance at the end of each of the first 5 years.

Still No Help for Rental Homes

Like all the other plans introduced, there is no relief for rental homeowners or investors. Your only options remain:

Let the home foreclose
Sell it
Wait for the market to turn around

What Do Now?

Neither of these programs officially start until March 4th. So your lender won’t be able to help you figure out if you qualify until then. Luckily, most of the lenders in the country have chosen to suspend foreclosures until after the Treasury Department releases their guidance early next month.

If you’re in foreclosure…and you haven’t been notified that your bank has suspended your foreclosure sale, call them today.